Welsh environment minister John Griffiths has approved plans to merge Environment Agency Wales, the Countryside Council for Wales and Forestry Commission Wales into a single national environmental quango.
Nine months of work by officials has produced a case to convince the minister who says he was persuaded by a business case which shows the move could save up to £158m over a 10 year period.
"Having carefully considered the business case, I am convinced that the establishment of a single environmental body will ensure the most sustainable and effective management of Wales' natural resources," said Mr Griffiths.
"Not only will one body result in a more streamlined way of working, it will also ensure more effective delivery, improved value for money and better outcomes for Welsh people, Welsh businesses and the environment."
Consultations will now begin on the new body which is intended to begin work from 1 April 2013.
"We welcome the minister's announcement and will provide our full support to creating this new body whilst continuing to deliver for the people of Wales on flooding, waste crime and regulating industry," said EAW director Chris Mills.
"The natural environment is crucial to the Welsh economy. It's vital that it is managed as well as possible to ensure the best outcomes for Wales. This new body has the potential to deliver more for the environment, the people and economy of Wales."
CCW chairman Morgan Parry said drawing on the expertise of the three agencies would create a strong organisation to engage with all sectors of society.
"Some things will remain unchanged - the new body will continue to provide independent advice to Government on a wide range of environmental issues, provide sustainable management of our public lands (including national nature reserves and forests), regulate industry and promote opportunities for everyone to enjoy the outdoors," he said.
"But these, and many other functions, will be approached with the benefit of a broader perspective that will make it easier to care for ecosystems in their entirety."
Forestry Commission National Committee of Wales chair Jon Owen Jones said the organisations would work together to achieve better outcomes for people, the environment and the Welsh economy.
"Our land management skills and delivery focus will play a significant part in achieving success," he said.
