A showdown between Stormont and local councils is on the cards following claims of a "power-grab" by ministers over plans to regenerate their local areas.
The decision not to go ahead with the handover of powers is likely to dominate the next meeting of the body which connects local government and the Assembly, known as the partnership panel.
Ahead of the meeting at the end of next month, the president of the councils umbrella body, the NI Local Government Association (NILGA) accused Stormont of a "policy turnaround".
The 11 super-councils had been promised the new responsibilities but the Executive, headed by the DUP and Sinn Fein, has decided it will hold on to them.
Four years ago the then Social Development Minister Mervyn Storey put delaying the transfer down to the need for more time to prepare legislation.
The department then said the reason was the need to reorganise the province's government departments from 12 to nine first.
NILGA president Sean McPeake said: "Councils are charged with bringing forward local development plans and community plans, setting out a vision for their areas covering housing, accessibility, economic development and neighbourhood improvements.
"Yet we have a separate government department holding the powers and £300m for comprehensive development schemes, land assembly and drawing up master plans.
"It's no secret that this marks a policy turnaround from what we and local government wanted and what we were told we were getting."
NILGA has called on the Executive to set up an all-party group on local government development and investment - to conduct a wholesale review of the powers of local councils.
Minister for Communities Paul Givan has argued, however, the public do not differentiate between councils or Stormont delivering services as long as they are "delivered in the most effective and efficient way possible".
Rejecting charges of a "power grab", he added: "The two Executive parties also make up the majority across local government, so it cannot be the case that we are holding power away from it when it will be the two Executive parties that will control the majority of all its authorities."