Following the 1886 general election, a Conservative administration headed by Lord Salisbury was formed. However the Conservatives did not have a majority of seats and had to rely on the support of the Liberal Unionist Party. As part of the price for this support the Liberal Unionists demanded that a bill be introduced placing county government under the control of elected councils, modelled on the borough councils introduced by the Municipal Corporations Act 1835.
Accordingly, the Local Government (England and Wales) Bill was introduced to the House of Commons on 19 March 1888, by the President of the Local Government Board, Charles Ritchie. The Bill proposed the creation of elected county councils to take over the administrative functions of the magistrates of the Quarter Sessions courts, that ten large cities should be "counties of themselves" for the purposes of local government and that each county was to be divided into urban and rural districts, based on existing sanitary districts, governed by a district council. The county and district councils were to consist partly of directly elected "elective councillors" and partly of "selected councillors", chosen by the elective councillors in a similar manner to aldermen in municipal boroughs.
The counties to be used for local government were to be the historic counties of England and Wales. A county council was to be formed for each of the ridings of Yorkshire and the three divisions of Lincolnshire (Holland, Kesteven and Lindsey). In addition a new County of London was to be formed from the area of the Metropolitan Board of Works. This would have led to the creation of fifty-seven county councils. The boundaries of the counties were to be those used for parliamentary purposes, adjusted to include urban sanitary districts on county borders within a single county.
Existing urban and rural sanitary districts, created in 1872, were to be redesignated as urban and rural districts. Urban districts that lay across county boundaries were to be included in the county with the greater part of the population in the 1881 census. Existing rural sanitary districts were to split on county lines to form rural districts.