Local Government Secretary Robert Jenrick said that councils in England’s largest county “now have the opportunity to develop and submit their proposals for how they want to restructure local government in their area to establish unitary local government”.
This would mean ending the current two-tier system of a county authority providing some services and seven district councils providing others, with the City of York separate.
Such a move is understood to be crucial for North Yorkshire to get the benefits of a devolution deal like those enjoyed in Greater Manchester, South Yorkshire and the Tees Valley.
But the prospect of a devolution deal and local government reforms were both thought to have been shelved by the Government amid reports that Ministers did not have the capacity to carry them out while also dealing with the pandemic and Brexit.
It is feared that any delay to powers and funding being transferred to North Yorkshire from Whitehall would damage the county’s recovery from the pandemic.
Local leaders have put together a document setting out what they want to see from government as part of the devolution deal, which includes up to £2.4bn in new funding and powers over housing, transport and planning.
But two district councils, Hambleton and Ryedale, have yet to agree the asks with their councillors and so the document is unlikely to be formally submitted as all parties must be in agreement.
Hambleton leader Mark Robson said he would only agree to the requests once he received assurances that a shake-up of local government was not a condition of devolution.
North Yorkshire County Council is preparing a submission based on creating just one authority for the county and keeping York separate.
But district leaders in North Yorkshire say this would be too big and are pushing for two authorities based on an east-west split down the A1.
As well as North Yorkshire, invitations are also being issued by the Ministry of Housing, Communities and Local Government to councils in Cumbria and Somerset.
These three areas have been selected as they are all advanced in their discussions about local government restructuring and councils in these areas have asked for an invitation to be issued.
Mr Jenrick said: “Councils in North Yorkshire are already working on developing their locally-led unitary proposals and I am now giving them the opportunity to submit them for consideration.
“Where there is local support, changing the structure of local government can offer better value for money and improved services for residents.
"We have always been clear that any restructuring of local government must continue to be locally-led and will not involve top-down solutions from Government.”
His statement last not did not mention devolution, but a government source said officials were "in discussions with leaders across Yorkshire, and elsewhere about further devolution".
The Government's White Paper setting out its vision for devolution was supposed to be published last month, but has now been delayed.
Business leaders have previously warned of the economic cost of delaying North Yorkshire devolution.
Stuart Paver, co-owner of York-based Pavers Shoes, a global footwear business with more than 235 stores, said: “Businesses need certainty to grow and generate jobs. Delay and confusion hold them back.
“We urge the Government to get a move on and commit to devolving full powers to a mayoral-led combined authority in York and North Yorkshire, with a single unitary authority for North Yorkshire which will give the county the strongest possible voice and help create the conditions for economic growth.”