HORSHAM United and Natimuk football and netball club boards have voted to amalgamate for the 2014 Horsham District Football League season.
The boards voted in favour of an in-principle agreement to become the Natimuk United Football Netball Club and to compete in the league this year and beyond.
AFL Victoria development manager Bruce Petering said it was a significant step in the process of bringing the two clubs together.
He said the clubs would continue to negotiate an agreement on the final structure, which would need to be ratified by the clubs' members at a special general meeting on February 19.
Mr Petering said Horsham United president Peter Miller and Natimuk president Andrew Carine urged all members to vote in favor of the amalgamation.
He said all financial members would receive letters outlining the merger and a postal voting form they were encouraged to return before the meeting.
"Peter and Andrew - along with their respective boards - believe a merger is in the best interests of the individual clubs, and combined will create a new and exciting club, building on the individual strengths brought into the merger and forming a sound base to generate future prosperity of the new entity," he said.
Mr Petering said the Natimuk United Football Netball Club would be based at Natimuk, but would play some games at Horsham City Oval.
"Importantly the new entity will continue the long established history of playing an Anzac Day match at the city oval," he said.
Mr Miller said retaining the Anzac Day clash was important to the club.
"We really want to maintain that Digger heritage," he said.
"We also want to maintain a presence at the city oval and are in talks with Horsham Rural City Council about how we go about that."
Mr Miller said the club's stakeholders were convinced a merger was the best way forward.
"We were at the stage where we were not going to have enough players," he said.
"We didn't manage to win a game last year and we had three or four players leave - so we already had an uphill battle.
"It's good to know Natimuk intends to involve us and that we've got a home for next year.
"From our point of view it's positive."
Mr Miller said a number of details were still to be ironed out.
"We're happy to have the club known as Natimuk United Football Netball Club and use the nickname the Rams," he said.
"We will probably look at playing in Nati jumpers for home games and Diggers jumpers for away games we only bought brand new jumpers last year."
Mr Miller said Natimuk's Tim Friend would coach the merged outfit, although he hoped Gary Davidson - who was appointed to coach the Diggers this year - would continue to play a role.
"There's still a lot to work out," he said.
Mr Carine agreed the proposed merger was still in an early stage.
"It's an in-principle agreement and very much in its infancy," he said.
"We're still getting our heads around how much work is involved. We are in discussions with our members and we will be keeping them informed as more information comes to light."
Mr Petering said if the merger was successful, the Wimmera Football League draw would be revamped to account for the reduction to an eight-team competition.
He said there would be few changes to the Horsham District league draw, except for the scheduling of an Anzac Day match.
"At this point in time a merger between the two clubs is a sensible way forward that will provide a sustainable future for the combined club," he said.
"It is now important that players and supporters of both clubs get behind the merger to ensure a strong and vibrant club emerges."