Kingston and Richmond Council have announced plans to share services “wherever possible” to save between £5m and £8m.
Workers were emailed the news about the ‘Thames Agreement’ this morning by council chief executives Bruce McDonald and Gillian Norton.
Kingston Council’s Conservative leader Kevin Davis tweeted: “For local authorities to survive austerity need bold decisions not patching."
But Liberal Democrat opposition leader Councillor Liz Green said: "I must have missed that in their election pledge."
She said the decision had been made "behind closed doors" and without being scrutinised following the axe of the Scrutiny Panel by the Tories.
The two Conservative-run neighbouring councils already share human resources, audit and legal services.
Last year the two councils created a social enterprise company Achieving for Children to run children’s services.
Kingston and Sutton councils merged their backroom IT services last year under the previous Liberal Democrat administration.
Leader of Richmond Council Lord True: "Whilst the approach will look at merging staffing structures and integrating operational arrangements, it will not merge the two councils."
Mr McDonald said in his email: “This proposal is not about merging the two councils.
"The approach will look at integrating operational arrangements and merging staffing structures where appropriate but both Kingston and Richmond Councils will continue to be separate sovereign bodies which define the particular policies and programmes they want to be delivered.”
Leader of the Liberal Democrats in Richmond Councillor Stephen Knight said there will be “very widespread consequences for local democracy".
He added: “There are many critical questions that need to be answered before such a plan should be taken forward and so far they haven't even been asked, let alone answered."
The proposals which will include cost savings and consultation arrangements, are expected to be published early next year.
Kingston Council has already cut the number of workers on its payroll by a third over three years - from 2,128 in March 2010 to 1,395 in June 2014.
Have you noticed a change in the services you receive from Kingston or Richmond Council? Email email@example.com