After six months of negotiations, three of Saaremaa's municipalities - Kaarma, Kärla and Lümanda - agreed to merge to form Saaremaa's biggest municipality, second in size only to the county seat of Kuressaare.
It is expected that a by-election will be held in November to appoint 19 members of the new municipality council.
The municipality, which will have a population of 8,000, will be headquartered in the current Kaarma government building in the city of Kuressaare.
Plans are still in the works to merge all of the island's 14 municipalities and one city into one administrative unit. Under a new rule. Kuressaare has the right to negotiate directly with municipalities for the purpose of bringing about a merger. Saare County also includes Muhu municipality, which is a separate island.