The Western Australian State Government’s plan to reduce the number of local government councils has taken another blow after the City of Nedlands and the City of Subiaco voted to remain independent.


Despite the State Government investing millions in the scheme, only two councils from 139 have merged, drawing criticism from the state’s Premier, Colin Barnett.


Mr Barnett claimed that the lack of merges had proven that local government has failed.


"This issue was started by local government two or three years ago," Mr Barnett said.


"They produced a report saying that a high proportion of authorities were not viable and could not sustain themselves into the future.


"I have to say local government has raised the issue but they haven't been up to it."


The decision to remain autonomous comes after both councils conducted a joint feasibility study in August 2010.


Subiaco Mayor Heather Henderson said the Subiaco community had resisted any idea of losing its identity through a merger with Nedlands.


“The community’s view is that, on its own, the feasibility study did not provide a convincing enough argument to support a merger,” she said.