Newcastle City Council has approved plans to transfer staff to Northumberland Council as part of plans to share transactional services.
The move, which will create a single workforce of more than 400, is expected to save nearly £1.8m for both councils over the next three years.
Newcastle has approved the business case for the merger and will now start a formal consultation with staff affected.
Cabinet member for resources at Newcastle, Cllr Veronica Dunn, said: ‘Newcastle has a proud record of finding innovative ways of doing more with less.
'Coming together with our neighbours in Northumberland will, I believe, deliver savings that can be reinvested back into sustaining vital public services that people depend upon.'
Northumberland's cabinet member for corporate services, Cllr Nick Oliver, added: ‘By exploring opportunities to provide joint financial services, this will help us to look at ways we can continue to achieve high quality frontline services in a cost-effective and more efficient way.'
The new service is expected to be up and running by April.
