Home Secretary Charles Clarke has written to Midland police forces promising the Government will foot the bill for the planned creation of a regional super-force.
It follows warnings from police chiefs that taxpayers must not be asked to pay for controversial plans to merge West Midlands, Warwickshire, Staffordshire and West Mercia police forces.
Three of the forces have backed the plan in principle, but refused to formally endorse it because they are concerned about funding.
In particular, taxpayers in some parts of the region could be faced with substantial increases in their precepts - the portion of their council tax bill which pays for fire and police services.
The fourth force, West Mercia, opposes the merger and is campaigning to retain its independence. Mr Clarke has written to chief constables to say the Home Office is prepared to pay all the costs of the merger plan.
The proposals would create a single force covering the wider West Midlands region, serving five million people.
They followed a report last September by HM Inspector of Constabulary which argued that merging forces with less than 4,000 officers would save public money, improve efficiency, and increase the ability of police to fight terrorism and serious and organised crime.
A spokeswoman for West Midlands Police said: "We have received a letter from the Home Office, we are seeking clarification on what it means and what is being offered."
A Home Office spokeswoman said: "We have said we will meet the net costs of restructuring." Any changes in council tax bills would be phased in over time, she said.
Mr Clarke has launched a consultation process, giving police chiefs until July to set out objections.