The news was greeted with fury in Parliament.
Shadow Local Government Secretary Katie Lam MP said the situation was “nothing short of a farce”.
She said: “People across the country are left without any sense of which council will be providing services in the year and years to come.”
Liberal Democrat MP Pippa Heylings attacked the government’s “botched handling” of the process.
“In my constituency of South Cambridgeshire, one of the fastest-growing areas in the country, businesses need certainty to invest and plan, councils need certainty to set budgets and deliver services, and council staff deserve clarity about their future,” she said.
The Local Government Association said “many councils [will] remain frustrated by the situation they have been placed in. All councils affected need urgent clarity on the next steps.”
McMahon insisted that the plans for LGR were “robust”.
But Reform UK, which was involved in some of the legal action, was delighted.
“It was a ridiculous plan [and] fundamentally a bad decision,” Peter Harris, leader of Essex County Council, told the BBC’s Politics East programme.
And he now expects ministers to change their plans. “We are willing to talk to the government about making the changes necessary to make councils work better,” he said.
Government MPs are insisting that LGR will still happen and stress that it’s important to get the details right to avoid any further legal challenges.
They also point out that there is a new ministerial team in post following Andy Burnham’s appointment as prime minister. It needs to be sure of what it’s doing.
But a growing number of local politicians are sceptical and wonder, after the other delays, if ministers can ever come up with proposals that will command popular support.
“At the moment we have absolutely no idea what this government is thinking, and that’s because the government isn’t sure what it’s thinking after two and a half years,” said Jerome Mayhew, the Conservative MP for Broadland and Fakenham.
Several MPs have suggested to me that, with many opposition councillors and MPs either lukewarm about or openly hostile to the plans, and public enthusiasm seemingly lacking, will the prime minister really want to spend so much political capital getting LGR over the line in the run-up to a general election?