Three London councils are planning to merge their main services in a bid to save between £50m and £100m a year – a move they claim will help protect front-line services as local government faces the fiercest spending cuts in more than a generation.

Under a radical plan announced on Friday, Westminster, Hammersmith and Fulham and Kensington and Chelsea councils would operate with a single chief executive and set of senior directors.

They would share the entire range of children’s services, education and social care, as well as bin emptying and street cleaning.

The proposals signal a reshaping of the way in which not only councils but some health and local authorities are sharing services and senior staff.

Three Labour-controlled south London councils – Lambeth, Southwark and Lewisham – are at an early stage of exploring extensive sharing of services, while more than a dozen small district councils have paired up to share a chief executive. Camden and Islington councils are about to appoint one, while Herefordshire has a joint chief executive of both its council and primary care trust.

The three council leaders – Colin Barrow from Westminster, Stephen Greenhalgh from Hammersmith and Sir Merrick Cockrell from Kensington – said in a joint statement that to protect services “in an age of austerity we need to seriously examine new ways of working, including sharing service provision with other local authorities to deliver more for less”.

They said the change did not amount to a full merger, because each council would retain its political sovereignty, setting its own council tax, and able to specify service levels across the boroughs.

Mr Barrow said: “This is a statement of intent and it is not one merger into a single entity. It is 100 mergers where we will look at potential savings service by service.”

But the councils believe that by cutting levels of bureaucracy and middle management, concentrating specialist skills and sharing services, money could be saved.

Paul Dimoldenberg, the Labour group leader at Westminster, said that while the Conservatives claimed to believe in localism “these plans will reduce local services and centralise decision-making in the hands of three Conservative council leaders and few unelected town hall officials”.

However, Eric Pickles, communities secretary, said: “This is exactly the sort of innovation that will help councils protect hard-working families and the most vulnerable.

“By sharing back-office services, they will be able to protect the front line and even improve the choice and services that’s on offer to local residents.”

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