Keighley will get its own town council after a decision to allow it by Secretary of State Stephen Byers.
But Oakworth will not be allowed to have its own parish council, said the Minister for Transport, Local Government and the Regions.
The campaign was led by Keighley Voice a group set up to champion the proposal.
Elections to the new council - the largest in the country, with similar powers to a parish council - will be held in May 2002.
It could meet in the old Keighley Borough Council chamber in Keighley Town Hall.
Campaigner Tony Wright said: "It marks a big achievement for us all and thanks must go to Keighley Councillor Martin Leathley and Keighley MP Ann Cryer for their work and support."
Keighley Voice's Brian Hudson confirmed it would make Keighley the largest town council in the country.
The aim was to have between 31 and 33 wards and the new authority would cover an area including Keighley centre, Riddlesden, East Morton, Springbank, Oldfield, Oakworth, Laycock, Ingrow and Long Lee. Deputy leader of Bradford Council, Councillor Richard Wightman said: "I'm glad that the government has endorsed the wish of local people."
A ballot held in July saw 16,860 people voting in favour with only 1,221 against.
The campaign hit a hurdle when villagers from Oakworth called for their own ballot. It resulted in 1,256 voting against an Oakworth Parish council and 846 in favour.
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