A bid to prevent the creation of a unitary authority in County Durham looks likely to be abandoned.
The unitary authorities will be created in April 2009
Seven district councils are set to be replaced by the single body in 2009.
Chester-le-Street, Derwentside, Easington, Sedgefield, Teesdale, Wear Valley and Durham City councils had hoped to launch a legal challenge.
But the city council said the plans would probably go no further after a similar bid in Cheshire and Shropshire was rejected by the Court of Appeal.
In July, the Department of Communities and Local Government approved the creation of nine new unitary authorities in England.
It claims the restructuring could save over £150m per year and directly improve front line services or reduce council tax bills.
But Durham's district councils say the move will be costly and disruptive and have a damaging local impact.
Soon after the plans were approved, the districts announced plans to launch a legal challenge.
It was put on hold pending the outcome of an appeal by Shrewsbury and Atcham Borough Council over the creation of a Shropshire unitary authority.
However, the Court of Appeal has since dismissed that application.
A Durham City Council spokeswoman said the district councils would meet to discuss their future plans, but that the legal challenge was now unlikely to proceed.
As well as Durham and Shropshire, unitary authorities are also being set up in Bedford, Chester, Cornwall, Exeter, Ipswich, Northumberland and Wiltshire.