The announcement was made on Thursday by senior SP leader Shivpal Yadav.
The merger of the two parties had earlier sparked off a battle between UP CM Akhilesh and Shivpal. Akhilesh had stalled the sitting MLA and notorious muscleman's party's merger with SP which was shepherded by his uncle Shivpal.
The crisis within SP and the family last month rose when Mulayam unilaterally replaced Akhilesh with Shivpal as state party president, prompting the chief minister to retaliate by stripping his uncle of the key portfolios of public works, irrigation and revenue.
Shivpal's ambitions of becoming chief minister had been public knowledge since 2012, when Akhilesh eventually beat him to the chair.
Thursday's merger is the latest jolt to Akhilesh after he had to reinduct tainted former mines minister Gayatri Prasad Prajapat into the Uttar Pradesh Council of Ministers.
Prajapati was sacked by Akhilesh as part of efforts by the chief minister to refurbish the image of his government before the Assembly elections.