Conservative and Labour councillors on Scarborough Council came together to draft a fresh motion today setting out the scope and the process that would be required in order to create the new body.
Scarborough and Harrogate are currently the only major places in North Yorkshire not to be covered by either a parish or a town council.
As part of the winning Local Government Reorganisation bid from North Yorkshire County Council, which will see all of the county's councils scrapped and replaced with new unitary authority in the coming years, creating town councils in the two towns were a part of the proposal.
A motion had been proposed by Conservative councillors Roberta Swiers and Clive Pearson before today's Full Council meeting calling for a referendum to be held.
Instead, an amended motion from Labour's Cllr Liz Colling which then got further input from the Conservatives was approved unanimously after being seconded by Conservative Group leader Cllr Derek Bastiman.
The council will now look at the process and gather information to allow the authority to make an "informed decision" to try and get the Town Council up and running before May 2023.
Cllr Pearson told today's meeting that residents could be left behind without it.
He said: "If Scarborough is not parished it will become a single one-tiered unitary authority. They will have nothing to add to anything that happens in their area [such as] how the grass is cut, how toilets are run, nothing like that."
Cllr Bill Chatt (Cluster of Independent Members) said that the public should have their say as it could add "£40 to £60" a year to their council tax bill.
If a town council was created it would mean residents in Scarborough would pay a parish council precept as part of their bill for the first time, in line with the rest of the borough.
In order to create a new authority, a community governance review must be triggered by the borough council which would then start the procedure around setting out the boundaries and the powers of the new authority.
Under existing legislation, a public referendum is not a legally required part of the process and any result would be non-binding. Consultation with the public must be carried out, however,
Once the process begins it must be completed within 12 months.