Plans to create a single council for North Yorkshire have been rejected by the government.
Services like rubbish collection would have been run by one council
North Yorkshire County Council was earmarked in March to become a unitary council, disbanding the area's seven district councils.
But Local Government Minister John Healey said the authority's bid had not been successful.
District council leaders welcomed the announcement, while the county council said it was disappointed.
John Weighell, leader of North Yorkshire County Council, said: "We are clearly disappointed with the government's decision, particularly since our proposal was initially rated by the government on all of its criteria as highly likely to achieve success.
"Nevertheless, our first and only priority is to provide the best services that we can for the best possible value to the public and businesses of North Yorkshire.
"We shall seek to do this by continuing to work closely with our district council colleagues."
All of the county's MPs and district councils had objected to the plans.
Last month Harrogate MP Phil Willis raised the issue at prime minister's questions and told Tony Blair he should either give residents a referendum or scrap plans altogether.
Harrogate MP Phil Willis questioned Tony Blair in Parliament
Mr Blair said the fact all seven of the county's MPs opposed the unitary idea was "very powerful".
Councillor Arthur Barker, speaking on behalf of the seven district councils, said: "People power has won the battle - the government has listened to the thousands of local residents and business people who expressed their fears for one authority.
"One body serving an area of 3,103 square miles with its extremes of urban and deeply rural communities will not have been able to cater for the diverse local needs of North Yorkshire.
"We have had our say, the local people have had their say, and we would like to thank them for their support and responses to the consultation.
"Now we intend to work hard to create better and stronger links throughout the county for the good of the 580,000 people who live here."