The plans are opposed by the District Councils’ Network, an umbrella group for such councils, which says there is “little evidence” from past reorganisations that taxpayers’ money will be saved.

Hannah Dalton, vice-chair of the network, said the “creation of mega councils” could prove “the opposite of devolution”.

She also warned the reorganisation could spark a “period of turmoil which will prevent councils from focusing on the local services that drive new homes, jobs and reduce pressure on the NHS”.

A Conservative Party spokesman said Rayner’s announcement is part of a plan to “strip councils of their powers” and to impose reorganisation from Westminster “without local consent”.

He said the party recognises more homes need to be built but says that these must be “in the right place”.

“This new announcement will do nothing to solve that – and instead open up another front on Labour’s assault on the countryside.”

The Liberal Democrats said council budgets were “on the brink” and without properly investing in social care more vital services would disappear.

The plans, however, have been welcomed by the County Councils Network, which says its members “now recognise the need to embrace the benefits” of devolution in the face of “significant financial challenges”.

Its chairman Tim Oliver said it had become clear that in many county areas, reorganisation was needed to “unlock” more generous funding from central government and create “more financially sustainable” councils.

Cllr Louise Gittins, chair of the Local Government Association, said “genuine devolution of powers and resources can play a huge role in promoting inclusive economic growth, creating jobs, and improving public services”.

She said her members were “open to change” but “remain clear that local government reorganisation should be a matter for councils and local areas to decide”.

Lord Houchen, the Conservative mayor of Tees Valley, welcomed the plans, including greater powers over transport and planning.

However, he told the BBC they could go further by giving more control over post-16 education, to make sure local people had the right skills for jobs being created in the area.