West Somerset Council agreed to merge with neighbouring Taunton Deane Borough Council in September to save money.
However, a group of 15 Taunton Deane councillors opposed the merger and launched a legal challenge against the move.
But a High Court judge has ruled the challenge as "premature and academic".
In his ruling Mr Justice Lewis said the Secretary of State "wishes consultation" to take place before he makes the final decision on the new council proposal under legislation.
Taunton Deane Borough Council leader John Williams said: "This judgement is a vindication our approach so far.
"It's also a testament to all the hard work and commitment of our officer team who have ensured we have acted properly and correctly at all times."
A judicial review of the decision to merge two Conservative-run local authorities in Somerset has been rejected in full.