The county and district councils could be scrapped and replaced with two unitary authorities, under plans being drawn up in Gloucestershire.
The idea is for Tewkesbury, Cheltenham and the Cotswolds to form one council and Gloucester, Stroud and the Forest of Dean to form the other.
Leaders from three of the district councils have agreed to start exploring the proposal.
The idea has been described as “nuts” by the leader of the county council.
The plan has been suggested ahead of the expected release of a White Paper in the autumn that is expected to call for more unitary councils, combined authorities and mayors in the UK.
In a joint statement the leaders of Cheltenham Borough Council, Cotswold District Council, and Stroud District Council, said: “We expect the government to confirm that if Gloucestershire is to unlock significant future investment, we must accept reorganisation.
“While strong arguments may be put forward for having a large, single unitary council, we believe that an innovative and progressive two council devolution deal should be explored as well to get the best for Gloucestershire.”
They said two unitary authorities would be “efficient” and “represent our unique urban and rural communities”.
‘Makes no sense’
However, the Conservative leader of Gloucestershire County Council, Mark Hawthorne, said having two unitary councils “would be nuts”.
He said it would lead to council tax hikes to pay for duplicating services, disrupt alignment with NHS, fire and Local Enterprise Partnership services, and lead to “weirdly shaped council areas that make no sense to anyone”.
Jeremy Hilton, leader of the Liberal Democrats on Gloucester City Council, said “trying to carve up Gloucestershire” was “reckless”.
“The city has had a council for 500 years and it needs to have a dedicated council.
“Splitting it down an east-west split would be damaging for the future of local government.”
Hayley Mortimer, BBC Gloucestershire political reporter
The two-tier system of county and district councils has been in place for nearly half a century but has come under pressure due to smaller budgets and rising demands.
There is broad agreement that reorganisation could help when it comes to sharing services and saving money.
But some politicians say that a single unitary authority would be bad news for taxpayers, because it wouldn’t represent those who live in the far corners of the county.
Instead, they are suggesting merging Gloucestershire’s seven councils into two bodies, essentially splitting the county in half.
But there’s no consensus on where the boundary would be.
The Lib Dems in Cheltenham and the Cotswolds are working with the Labour group in Stroud on the idea of an east-west split.
But politicians in Gloucester don’t like this and want the city to have more powers – perhaps a Greater Gloucester unitary authority with the rest of the county forming another.
And as the biggest authority, the county council will be key in any decision made.