The gram panchayats of Kaup, Uliyargoly, and Mallar in Udupi district have been merged to form a single Kaup town municipality.
With this, four revenue villages including Muloor will fall under the newly formed municipality, official sources said.
The decision to convert the gram panchayats into a municipality had run into controversy after doubts were expressed about the rural people losing various benefits.
The rural people were also apprehensive about the increase in taxes when the region turns into town municipality.
State Minister for Urban Development and Udupi district in-charge, Vinay Kumar said in a statement that an administrative officer would be appointed to run the municipality till an elected body came into power.
Kaup would be the headquarters of the new municipality, while sub-centres would be located at Mallar and Uliyargoly villages.
Kaup would be developed into a model municipality under a development planning authority, he said.
