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Fire and rescue services in Wiltshire and Dorset could merge under new plans.

Wiltshire & Swindon and Dorset Fire authorities said the proposals would help combat the reduction in central government funding.

They have agreed to develop a case for combining services and authorities, proposed to take place by 2016.

Unions have urged "extreme caution" with the final decision, which will require parliamentary approval and is expected to be made by September.

In a joint statement, councillor Graham Payne, chairman of Wiltshire & Swindon Fire Authority, and councillor Rebecca Knox, chairman of Dorset Fire Authority, said: "Both services have and continue to make substantial savings, but the level of grant we receive from government will continue to decline.

"In order to minimise any impact on frontline services and in particular the level of response we provide to our communities, members of both fire authorities have agreed to explore closer working with a view to combination in 2016.

"We believe that this will provide significant savings, lessen the reductions to front-line services, and ensure our key support departments are resilient."

As part of the plans, the two fire services could also move to a joint command and control centre in Potterne, Wiltshire, in 2015.

The authorities said that by 2017, it was expected the Wiltshire service would be facing a £4.2m deficit, and Dorset £3.7m.

If the merger goes ahead the new organisation would become the fourth-largest combined fire authority in England, outside of London.

The Fire Brigades Union (FBU) in both counties has urged "extreme caution" with the plans, which it says came as a surprise for many staff.

In Dorset, the FBU brigade secretary Karen Adams, said: "It's time that politicians understood the real damage that their cuts are doing, and a merger with Wiltshire will not resolve the key issue for fire and rescue services, which is funding."

The neighbouring FBU in Wiltshire said it had not expected talks to get this far, with secretary Brent Thorley calling for detail.

"We want to know how this will impact on response times, the service to the public and what it will mean for the firefighters themselves," he said.

The business case will be developed and consulted upon during summer 2014.