We report simulations of the formation of a giant disc galaxy from cosmological initial conditions. Two sets of initial conditions are used, initially smooth density for both gas and stars, representing the Warm dark Matter scenario, and an initially fluctuating density representing the standard spectrum for the Cold dark Matter scenario. For the WDM initial conditions, the galaxy has a population of long lived dwarf satellites at z = 0, with orbits close to a plane coincident with that of the giant galaxy disc. The detailed properties of these dwarfs mimic closely the observed properties of Local Group dwarfs with respect to mass, and kinematics. However they do not have individual dark matter halos, but orbit in the nearly spherical dark matter halo of the giant galaxy. The reason for this is that the initial population of dwarf dark matter haloes, which form during the initial collapse phase, all merge into the halo of the giant galaxy within a few to several Gyears, while the long lived dwarfs form as a secondary population by gravitational collapse of high angular momentum gas in the outer reaches of the giants proto-galactic disc. Due to their late formation and their more distant orbits, they survive until the present epoch as individual dwarf galaxies at radii 20-50kpc from the giants centre. For CDM initial conditions there are many more dwarf satellites at z = 0, some of which form early on as gas condensations in DM sub-halos, and survive with these individual DM halos till z = 0 due to their being sufficiently well bound to avoid merging with the main galaxy. However even in this case some second generation satellites form as initially gas only objects, just as for the smooth initial conditions of WDM.