The move would have seen the abolition of all seven district councils in North Yorkshire, including Harrogate, and the creation of just one over-arching council with decision making for the whole of the county.

North Yorkshire County Council made the bid for unitary status and the Government put it on the shortlist to proceed to the next stage in March, but local protests from councillors and all of the county's MPs paid off when Local Government Minister John Healey dropped the county's proposal on Wednesday.

Mr Healey said the bid had been abandoned because the area was too large for a single authority, that there was no natural centre, that the proposal was not a coherent entity and that neighbourhood arrangements were seen as complex and potentially unworkable.

The Government concluded that strategic leadership was not sufficient, with significant risks that outcomes would not be delivered.

Victory for democracy

The leader of Harrogate Borough Council, Coun Mike Gardner, said the move represented a victory for local democracy, adding that it had been a long struggle to win their battle.

"Believe you me, if this had have gone through, people would have suffered, " he said.

"It would have meant either more tax, and you can't have more tax, or cuts in services.

"It's been a hard task to make sure that this idea didn't get through. This would not have been a good outcome if the Government had said yes to the unitary bid.

"It is just disappointing that, although they took note of public opinion, it was not one of the key reasons on the list for turning this down and, as you know, public opinion was very much against this unitary bid.

"Every council would have suffered in a different way. In Harrogate, they couldn't have sustained the level of services that we provide if decisions had made centrally in Northallerton."

Mick Walsh, chief executive of Harrogate Borough Council, said he did not feel North Yorkshire County Council would have placed as much emphasis or investment on the town's conference and exhibition facilities or cultural attractions.

And Harrogate and Knaresborough MP Phil Willis, who was among all seven North Yorkshire MPs of every political persuasion who launched their own protest at Westminster, also hailed the decision.

Last month, Mr Willis raised the issue at Prime Minister's Questions and told then-Prime Minister Tony Blair he should either give residents a referendum or scrap plans altogether.

"This is a triumph for democracy over self-interest, " Mr Willis said.

"I am absolutely delighted that the North Yorkshire unitary authority bid has been rejected. It would have spelt financial, economic and social disaster for the Harrogate district.

Ill-conceived plans

"The ill-conceived proposal by a self-seeking county council, which sought to reject the views of all seven local MPs and all the district councils, has rightly been condemned to history."

North Yorkshire County Council had claimed that a new authority would deliver annual efficiency savings of £14 million, massively offsetting projected one-off set-up costs of £13.5 million.

County Coun John Weighell, Leader of North Yorkshire County Council, said: "We are clearly disappointed with the Government's decision, particularly since our proposal was initially rated by the Government on all of its criteria as highly likely to achieve success.

"Nevertheless, our first and only priority is to provide the best services that we can for the best possible value to the public and businesses of North Yorkshire. We shall seek to do this by working closely with our district council colleagues.

"The county council looks forward to working with all of its partners, including the seven district councils, to achieve the best possible outcomes for the public of North Yorkshire."