The split would have seen Harrogate join Craven, Hambleton and Richmondshire, while Scarborough would have merged with th Selby, York and Ryedale.
What are the different councils doing?
In most of England, local government operates on a two-tier system, with both a county council and a district council providing services.
County council responsibilities include education, social services and waste disposal.
Each county is subdivided into areas represented by district councils. These municipalities are responsible for garbage collection, housing and ning planning.
Some partsof the country - usually towns or cities - are governed by unitary authorities which provide all the services of local government.
Councilor Richard Cooper, head of the Harrogate Borough Council, said he was "disappointed" by the decision.
"My argument has always been that everything unitary for our region must be of the right size and structure to deliver efficient and responsive services to residents.
Image copyright image caption The Head of the Richmondshire District Council has said she was "extremely disappointed " with the decision
He added: "The county council exceptionally provides some services - children's services and adult social care to name just two. In other areas they have let down our borough. "
Councilor Angie Dale, Head of Richmondshire District Council, said she was " extremely disappointed "that the government "chose to create a huge council ".
But she said they wont "work together " to make sure the new system works for the residents.
Keith Aspden, Chief of York City Council welcomed the news that authority would not be affected by the reshuffle.
He said: "The govt decisionernment is a huge vote of confidence for York, its council and a recognition of the progress we have made with our local partners, businesses and communities.
"From the start of this process, residents and organizations across the city have been strong advocates for York, stressing the need for continuity to support our recovery.
"We are delighted that so many residents, businesses and partners have had their say in say, and that the voice of our city has been heard. "
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