Plans to create a super council covering Peterborough and Lincolnshire could be ready for approval in the next six months.
The leader of Peterborough City Council, councillor John Holdich, confirmed talks are starting with colleagues across the county border to work closer together.
The talks are expected to lead to firm proposals which could see services being shared, or even lead to councils amalgamating into one large authority.
With all councils seeing a big squeeze on their government funding, cllr Holdich said the closer working relationship would save money and help share expertise.
The council has been a unitary authority since 1998 and cllr Holdich said there would be a reluctance to go back to being part of Cambridgeshire County Council, although district councils in Cambridgeshire could form part of the new arrangement.
Cllr Holdich added: “In the next six months we will start to see firm proposals. There could be a formal arrangement or a joining together to run services.
“There would need to be an advantage to Peterborough and for it not just to be a nice thing to do. It’s got to give us better services or save us money.”
Once agreed, the new arrangement would need to be sent to the government for approval.
Cllr Holdich said recent talks with Lincolnshire councils have been about extending economic links between the authorities to encourage more development.
He also confirmed he is not in favour of having an elected mayor in Peterborough.
The Queen’s Speech last month confirmed that the government would introduce legislation enabling cities to bid for an elected mayor with more powers over transport, planning, policing and health.
Councils in Lincolnshire have also confirmed they are expecting geographical changes to be made in the near future.
In addition, it has been revealed Lincolnshire County Council will this month ask the government about running services in neighbouring North East Lincolnshire Council.
Cllr Martin Hill, the leader of the county council, has said the authority is exploring all options as it seeks to solve funding issues.