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Plans to allow Exeter to run everything itself including schools, roads and social services are being scrapped.
The new Government's decision was supposed to be revealed in the Queen's speech - which sets out their plans for the next 18 months - but was leaked.
Exeter's MP Ben Bradshaw says he will fight the decision: "it will be very difficult to stop indefinitely. Its so far down the road now, it seems ludicrous to reverse it when so much work has already been done."
He continued: "a lot of money has already been spent, a lot of decisions that we were looking forward to taking next year will go back to being taken by Devon county councillors, who don't know about Exeter."
Devon County Council has always been against the separation. Leader John Hart thinks scrapping the plans are in everyone's best interests: "Exeter couldn't afford it and Devon couldn't afford to have lost Exeter. It would have cost us in the region of £25 million pounds to disaggregate Exeter out of Devon County, it would have cost Exeter a lot of money as well."