The Government has warned it will only allow councils in the region to merge if the legacy of the North East Assembly referendum has faded.
Councils in Northumberland, Durham and Tyne and Wear have asked ministers to change the law and let them form a combined authority tasked with creating jobs.
In exchange for setting aside local rivalries the move will see councils handed the chance to spend millions of pounds in devolved Government funding.
City leaders say there will be no change to day to day services, with each council remaining as its own locally elected body.
Behind the scenes though the councils will formally agree to share powers in areas such as transport, skills funding and investment, similar to the situation in Manchester.
The change in the law, if passed next year, will mean the councils gaining permission to borrow huge sums of money, taking on the legal risks linked to it.
But already the Government’s formal consultation document has raised concerns about the ‘North East Assembly factor,’ warning that the councils must show local support after the disastrous devolution referendum in 2004.
Back then some 78% of those voting said they did not want the Assembly, rejecting it as “an additional tier of Government.”
The document adds: “Given this clear expression of widespread opposition among local residents for new governance institutions, the Government will give particular weight to evidence from the consultation about the level of local support this proposal for a combined authority commands.”
And while agreeing there is a need for a new body in the region to lead growth, the document said that given the events in the area over the last 10 years, the Government believes it is right that before any decision is taken there is clear and compelling evidence that the past opposition of electors is not repeated with the combined authority.
Gateshead Council leader Mick Henry has said he is confident the combined authority is the best way forward.
Mr Henry, chair of the North East Leadership Board, said: “This is the next step to securing future economic growth for our area. It will allow us to gain additional decision making powers and funding from Government, which can best happen by joining forces.
“Not only will we be able to act as a single voice to tackle key priorities, but we will have better opportunities for attracting investment to the area, creating more jobs and improving transport infrastructure.
“I would encourage all our partners to support the Government’s proposal by taking part in this consultation. Showing Government we have strong local support strengthens our position to deliver our vision for future economic prosperity.”
The authority would replace the Tyne and Wear Integrated Transport Authority, the council group which overseas Metro-owner Nexus, which is not affected by the changes.