Ipswich Borough Council's application to become a unitary authority has been shortlisted by the government.
The Department of Communities and Local Government has announced that Ipswich is one of 16 councils successful in its bid for unitary status.
The move would give the borough council control of education, social services and trading standards.
There is now a three-month consultation period leading to a final decision in July 2007.
If Ipswich is one of the final eight successful councils, nothing will change until April 2009.
The news was welcomed by all three main political parties on the council who believe the current two-tier local government system causes confusion, waste and duplication.
In a statement the council said: "We believe a single unitary council for Ipswich would bring considerable advantages, reduce duplication, generate better performance and help Ipswich meet the very strong growth challenges it faces over the next 20 years.
"Ipswich people should deliver all local government services for Ipswich people."
The leader of Suffolk County Council, Jeremy Pembroke said: "Local people will need to be clear, both in terms of the services they will receive and how much it could cost them. In our view the figures do not add up.
"The unanswered question for people in Ipswich and across the whole of Suffolk, is who will pay for any new council structure?"
The borough council's current responsibility includes planning, housing, waste collection and environmental health.