Dunedin Mayor Dave Cull yesterday confirmed the potential benefits of merging the two councils were being investigated.
A report would be considered by city councillors within weeks.
If pursued, a merger could see the creation of a unitary council providing the functions of the city council and those of the regional council in Dunedin under one umbrella.
Mr Cull told the Otago Daily Times he had requested a report detailing the two councils' responsibilities and the "implications and opportunities" of a unitary council.
The report, being prepared by DCC chief executive Paul Orders, was expected to be ready for councillors to discuss in "two or three" weeks, Mr Cull said.
ORC chairman Stephen Woodhead had been informed "as a courtesy" but would have no input into the discussions at this stage, Mr Cull said.
Public consultation would be needed before any merger, if one was pursued, he said.
Mr Woodhead said when contacted he was taking a "wait and see" approach to the "internal DCC think-piece".
However, his views on unitary councils had not changed since March, when he told the ODT he doubted the drivers for change existed in the lower South Island.
"What is the issue that's trying to be dealt with here?" he said yesterday.
The DCC's move came after local government changes unveiled by Prime Minister John Key and then local government minister Nick Smith this year.
The changes streamlined the process for creating unitary councils if savings and other efficiencies could be made.
Under the changes, any council could submit a proposal for a unitary council to the Local Government Commission, which, if accepted, could lead to consultation and a public vote, with only a simple majority needed to succeed.
The commission would have to consider whether a unitary council could simplify planning processes, and be satisfied water catchment issues could be dealt with effectively.
Any new unitary council would also be named simply, after the city or district they represented, like the Auckland Council created in 2010.
Mr Cull said discussion and any subsequent decision needed information rather than just opinions and simplistic slogans.
Also yesterday, Mr Cull and other mayors meeting at the Otago Mayoral Forum in Balclutha agreed there was little appetite for amalgamations between neighbouring councils, but instead wanted to investigate greater regional co-operation.
That could take the form of more shared services between Otago's councils, such as computer systems, back-office work or procurement, Mr Cull said.
The potential would be investigated by Local Government New Zealand, which would report back to the councils, although no timeframe had been set, he said.
