The Victorian Local Government Minister, Jeanette Powell, is seeking the dismissal of the entire Wangaratta Rural City Council, in northern Victoria.
The call comes after an investigation into allegations of bullying and wasteful spending by the council.
Ms Powell will introduce a bill to the Parliament to dismiss the council and for an administrator to be appointed until the next council elections in 2016.
It will need to be passed by a majority in the Parliament in order to be legislated.
She says a number of staff members and two councillors have resigned because of the behaviour of elected members.
"The dismissal of the council is a last resort and it's a step that the Government does not take lightly," she said.
Ms Powell says she has made the decision in the interest of the community of Wangaratta.
"One point five million dollars in ratepayers' funds have been wasted in less than 12 months as a result of council's problems, with no end in sight to the drain of resources," she said.
In May, the , Peter Stephenson, to oversee the council.
He was initially appointed for three months, but that was extended by a month.
His advice to the Government has led to the call for dismissal.
Ms Powell says the council has been given adequate support to improve its behaviour but has failed to change.