CRAVEN District Council is celebrating the news that it will not be abolished amid a shake-up of local government.
North Yorkshire County Council has lost its bid to create a single authority covering 3,000 square miles and looking after around 580,000 residents.
The Government has rejected the unitary council on the grounds that it would span too wide an area, has no natural centre, is not a coherent entity and would be too difficult and complex to work.
Secretary of State for Communities and Local Government, Hazel Blears, announced the decision on Wednesday following months of consultation.
The county's seven district councils - including Craven - faced the possibility of being dissolved if a single county-wide council been introduced.
Coun Carl Lis, leader of Craven District Council, said he was delighted with the news.
"Craven District Council will quickly move on, renewing our commitment to doing our very best to serve our local communities and continuing to improve local services," he said.
"I believe Craven is very well placed to play a significant role in the debate about the future of local government in North Yorkshire. We cannot expect that the world, including the local government world, will ever stay the same.
"We must give political leadership to the drive for shared services where it is best for our council and our district, and we must approach this in a strategic and coherent way.
"We have many strong players in the council and we must seek over the coming months to harness that strength towards the best future for Craven."
Chief executive Gill Dixon added: "This decision, whilst very welcome, does not mean that we will rest on our laurels. We are an improving council and I am confident that we will face future challenges head-on.
"Although this decision comes as a relief to many of Craven's hard-working staff, we all know that local government must change and adapt to continue to deliver the best for our residents."
Also welcoming the news was Skipton and Ripon MP David Curry, who drew together a cross-party group of MPs from North Yorkshire to stand together against the proposals.
He said: "North Yorkshire would have been too big and too remote from the people."
But Mr Curry said the decision was not a "vote for status quo" and that the district councils now had to put "energy and momentum" into working more closely with each other.
Coun Arthur Barker, of the District Council Network, which comprises the county's seven district councils, added: "People power has won the battle. The Government has listened to the thousands of local residents and businesspeople who expressed their fears for one authority covering more than 3000 square miles.
"North Yorkshire has got the best solution - the current system of seven district councils and one county council, but all working together for the good of the county."
County Coun Mark Wheeler said a single North Yorkshire council had been an "ill-judged, ill- conceived" idea.
"I'm speechless about how North Yorkshire could pursue the bid when they are out of step and tune with all the districts, businesses, voluntary sector and residents," he added. "Nobody wanted it, but they still pursued it."
The leader of North Yorkshire County Council, Coun John Weighell, said he was disappointed with the decision, particularly as the authority's proposal was initially rated by the Government as highly likely to achieve success.
He added: "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 main principles behind our proposals were to keep services local, deliver them with greater consistency, clarity and efficiency, and remove duplication and bureaucracy. I believe that these are still sound principles and the challenge is now on how we can all work together within the existing system to deliver them."
Three of Craven's county councillors - Philip Barrett, Shelagh Marshall and Robert Heseltine - also supported a unitary county council. Their reasons included eradicating the growing financial burdens on smaller district councils, avoiding duplication, less confusion about who did what and a lower council tax.
Coun Heseltine, also a district councillor, said: "The disappointing aspect of the announcement is that with Government spending reviews, it's already been indicated there will be less resources for small district councils and to that end, that can only be bad news for services in Craven. A robust unitary authority would have been better placed to provide quality services for the future."
Coun Barrett said he was worried the decision would put pressure on the finances and services of smaller councils, like Craven, and this would be felt by tax payers.