Preston, South Ribble and Chorley could merge to form a new central Lancashire council by 2009 if the Government presses ahead with plans to abolish the two-tier system of local government.

Preston City Council's scrutiny committee has agreed to set up a cross party working group to look at ways of dealing with the move.

Chief executive Jim Carr has warned councillors about speculation that the 2007 elections could be shelved to avoid voting in a council that might sit for just one year.

Instead, 'shadow' votes could be cast for the newly formed councils in 2008, which would take power the following year.

Preston City Council leader Councillor John Collins, said the current structure of local government, which means people in Preston and South Ribble are governed by their district councils and Lancashire County Council, is confusing and inefficient. He added: "Preston is already working closely with South Ribble and Chorley on a number of joint projects and as we move forward we'll need to discuss the potential for a local solution that would best represent the interests of central Lancashire."

In 2003 when the Boundary Commission looked at shaking up local government, Preston and South Ribble councils agreed that a new council could be formed with the two authorities, or by merging the two with Chorley. The commission also suggested a Lancashire wide unitary authority as an option.

Ultimately the plans fell flat because they were tied in with the failed proposals to create regional assemblies, which were shelved after people in the North East voted overwhelmingly against the idea.

South Ribble Borough councillors were due to discuss local government structures at the full council meeting last night.

It forms part of a wider agenda to merge police forces, ambulance services, and primary care trusts.