Map
The term 'ceremonial county' dates from the 1990s, but the concept of the counties used for the Lieutenancy differing from those used for administrative purposes dates back much further - some counties corporate were appointed separate Lieutenants from the larger county (often the posts would be held jointly), and the three Ridings of Yorkshire had been treated as three counties for Lieutenancy since the 17th century.
The Local Government Act 1888 set up county councils to take over the administrative functions of Quarter Sessions in the counties. It created new entities called "administrative counties" that constituted all the county apart from the county boroughs: also some traditional subdivisions of counties were constituted administrative counties. The Act further established that areas that were part of an administrative county would be part of the county for all purposes. The largest difference was the existence of the County of London, created both an administrative county and a "county" as the Act, which covered parts of the historic counties of Middlesex, Kent and Surrey. Other differences were small and resulted from the constraint that urban sanitary districts (and later urban districts and municipal boroughs) were not permitted to straddle county boundaries.
Apart from in Yorkshire, areas that were subdivided were retained as a single ceremonial county. For example, The administrative counties of East Suffolk and West Suffolk, along with the county borough of Ipswich were considered to make up a single ceremonial county of Suffolk, and the administrative county of the Isle of Wight was part of the ceremonial county of Hampshire.
The term ceremonial county for these entities is an anachronism - at the time they were shown on Ordnance Survey maps by the name 'counties' or 'geographic counties', and were referred to in the Local Government Act 1888 as simply 'counties'.
Apart from minor boundary revisions (for example, Caversham, a town in Oxfordshire, becoming part of Reading county borough and thus of Berkshire, in 1911), these areas changed little until the 1965 creation of Greater London and Huntingdon and Peterborough, which resulted in the abolition of the offices of Lord Lieutenant of Middlesex, Lord Lieutenant of the County of London and Lord Lieutenant of Huntingdonshire and the creation of the Lord Lieutenant of Greater London and Lord Lieutenant of Huntingdon and Peterborough.
In 1974, administrative counties and county boroughs were abolished, and a major reform took place. At this time, Lieutenancy was redefined to use the new metropolitan and non-metropolitan counties directly.
Following the 1990s local government reforms, Avon, Cleveland, Hereford and Worcester, and Humberside were abolished. This led to a resurrection of a distinction between the local government counties and the ceremonial or geographic counties used for Lieutenancy, and also to the adoption of the term 'ceremonial counties', which although not used in statute was used in the House of Commons prior to the arrangements coming into effect. [1]
Avon was mostly split between Gloucestershire and Somerset, with Bristol regaining its status of a county of itself. Cleveland was partitioned between North Yorkshire and County Durham. Hereford and Worcester was split into Herefordshire and Worcestershire. Humberside was split between a new ceremonial county of East Riding of Yorkshire, with the remaining parts going to Lincolnshire. Also at this time, Rutland was restored as a ceremonial county. Many county boroughs were re-established as 'unitary authorities'.
Most ceremonial counties are therefore defined today as groups of local authority areas; the same situation as prevailed between 1889 and 1974. The Association of British Counties, a traditional counties lobbying group, have suggested that the ceremonial counties could be restored to their ancient boundaries, or as near as is practicable.

History
The Lieutenancies Act 1997 defines the "ceremonial counties" in terms of local government areas created by the Local Government Act 1972 as amended. Schedule 1, paragraphs 2—5 defines them as:

Bedfordshire, including Luton
Berkshire
Bristol
Buckinghamshire, including Milton Keynes
Cambridgeshire, including Peterborough
Cheshire, including Halton and Warrington
City of London
Cornwall, including Isles of Scilly
Cumbria
Derbyshire, including Derby
Devon, including Plymouth and Torbay
Dorset, including Bournemouth and Poole
Durham, including Darlington, Hartlepool, and Stockton-on-Tees north of the River Tees
East Riding of Yorkshire, including Kingston-upon-Hull
East Sussex, including Brighton and Hove
Essex, including Southend-on-Sea and Thurrock
Gloucestershire, including South Gloucestershire
Greater London, excluding the City of London
Greater Manchester
Hampshire, including Southampton and Portsmouth
Herefordshire
Hertfordshire
Isle of Wight
Kent, including Medway
Lancashire, including Blackburn with Darwen, and Blackpool
Leicestershire, including Leicester
Lincolnshire, including North Lincolnshire, and North East Lincolnshire
Merseyside
Norfolk
North Yorkshire, including York, Middlesbrough, Redcar and Cleveland, and Stockton-on-Tees south of the River Tees
Northamptonshire
Northumberland
Nottinghamshire, including Nottingham
Oxfordshire
Rutland
Shropshire, including Telford and Wrekin
Somerset, including Bath and North East Somerset and North Somerset
South Yorkshire
Staffordshire, including Stoke-on-Trent
Suffolk
Surrey
Tyne and Wear
Warwickshire
West Midlands
West Sussex
West Yorkshire
Wiltshire, including Swindon
Worcestershire Lieutenancy areas in 1890