Save Lake Illawarra Action Group spokesman Col Wilton said if he were a councillor he would have voted as Shellharbour councillors did, but understood the concerns of their Wollongong counterparts.
Mr Wilton, who attended both meetings, said while the same report on the structure of the estuary committee was presented to each council this week, Shellharbour councillors were given a further report on assets to be transferred to Shellharbour council ownership.
"Wollongong was not in a position to make a financial judgment and that was a big difference - there is a significant amount of property in the Wollongong area and no-one knows who is getting what at this stage," Mr Wilton said.
He said the action group wanted two community representatives from each council area - rather than one - on the committee.
Meantime, Shellharbour MP Anna Watson said the stand-off between Wollongong and Shellharbour councils over the future management of Lake Illawarra pointed to chaos unless the government guaranteed funding.
"The NSW government alone bears responsibility for this absolute chaos," Ms Watson said.
"I have long predicted this Mexican standoff over the future of Lake Illawarra ... there was never a good reason presented to abolish the Lake Illawarra Authority."