New councils are to be created across Sydney and NSW as early as this week if Premier Mike Baird's government signs off on merger proposals on Thursday.

The creation of up to 20 larger councils across the state is being accelerated, in part to resolve what could emerge as a political sore for the Coalition ahead of the July 2 federal election.

But councils that have challenged their proposed merger in court will be spared from the amalgamation process, pending the outcome of those court battles.