The Horowhenua towns of Ōpiki and Tokomaru have been denied their requests to ditch the district and become affiliated with Palmerston North City.
Residents of the two towns requested a boundary alteration in October 2018, saying they felt neglected by Horowhenua District Council.
Residents felt more connected to Palmertston North, where they work, shop and go to school.
While the Local Government Commission acknowledged residents' strong ties to Palmerston North, it ruled the move would not provide benefits on the scale required to make a change.
It has recommended the two councils work together to enhance services in the towns, and that the Horowhenua District Council provide clearer information to residents on its assets and services in the towns and how these are funded.
"It is important that both councils think creatively about opportunities to enhance services in Opiki and Tokomaru," said chief executive Penny Langley.
"It is also important that residents are provided with clearer information on how their rates are used, what services are planned for the future, and how they can have a role in decisions on the future of those assets and services."