A paper to be published on Monday is expected to set an ambition to move towards unitary councils across all of England, with areas that currently have two tiers being asked to draw up merger proposals.
Streamlining local government will be presented as a way to enable the creation of more powerful local mayors, regarded by Labour as a means to unblock infrastructure and attract greater investment.
Elected mayors would then oversee areas representing two or more councils, and be handed more powers over things such as planning decisions and public transport.
Dozens of district councils could be abolished as a result – prompting some to claim it would deprive people of genuinely localised decision-making.
It would require a series of deals nationwide emulating North Yorkshire, which now has a unitary authority after eight councils were merged together last year.
This would mark a scale of reorganisation that goes beyond what Labour promised in its election manifesto, and mark arguably the biggest shake-up of local government since the 1970s.
The overall timetable and route to achieving this has not been confirmed - and it is not yet clear if the government will use legal powers to force councils together, or hope to encourage them to do so through funding arrangements.
Labour argues the overhaul will make local government simpler and produce savings by making the delivery of services more efficient.
In a speech on Monday, Deputy Prime Minister Angela Rayner will vow to make devolution the "default position of government", and give councils the powers they need to "drive growth and raise living standards".