Kiama MP Gareth Ward has declared Shellharbour City Council "dysfunctional" and "out of control" after the council this week voted to hold a referendum on having a popularly elected mayor and increase the number of councillors.
Councillors voted 4-3 to have the questions put at the 2016 council elections.
"In my opinion, this council is dysfunctional," Mr Ward said.
"All increasing the number of politicians will do is make a dysfunctional council even more dysfunctional."
The Liberal MP said it was "extraordinary" that Shellharbour council would allow a referendum to increase the number of councillors, but refuse to have a referendum in relation to the Shellharbour City Hub project which "will encumber the community with debt for years to come".
"This is yet another example of gross double standards and hypocrisy from Shellharbour City Council," Mr Ward said.
However, Labor MP Anna Watson welcomed the council decision to hold a referendum on the issue, but said the Minister for Local Government, Paul Toole, only had to get out his pen and strike out section 7 of the existing law and the people of Shellharbour City would have their democratic right to directly vote for the mayor restored immediately.
"It's really that simple," Ms Watson said.
"The Liberals have never satisfactorily explained why it was necessary to take away the right of the people of Shellharbour local government area to directly vote for the mayor.
"The Liberals only did so because they thought - probably on the advice of Gareth Ward - that they'd get enough Liberals elected to control the position from the council's back rooms with only a vote among councillors each year."
Ms Watson predicted the referendum on directly electing the mayor would be overwhelmingly endorsed.
Liberal Shellharbour councillor Kellie Marsh has said she intends to lodge a rescission motion against the decision.
"There will be no benefit to the community," Cr Marsh said.
"They voted to hold a referendum with no opportunity for the public to comment.
"The recommendation was to receive and note the report and Cr [John] Murray came up with an alternative motion.
"We are looking at spending over $40,000 plus recurring costs for another two councillors."
Shellharbour council's Labor mayor Marianne Saliba labelled Mr Ward's comments "bizarre".
"Gareth Ward claims to be a champion for democracy - he has written more petitions than St Paul wrote letters - yet he is trying to deny the democratic rights of the people of Shellharbour City," Cr Saliba said.
Before Shellharbour City Council was placed in administration in 2008, the council had 12 councillors that represented six wards, plus a mayor elected by the people.
When the council was reinstated by the new Liberal government in 2011, the number of councillors was cut from 13 to seven, the ward system was abolished and the mayor is now elected each September by councillors.