The New South Wales Local Government Minister has given Wingecarribee Shire Council a please-explain note after "long-term division and conflict".
Shelley Hancock issued the council, in the state's Southern Highlands, with a Notice of Intention to issue a Performance Improvement Order (PIO).
"I have heard loud and clear the concerns of residents, the Mayor and local MPs Nathaniel Smith and Wendy Tuckerman about the ongoing infighting and its impact on council meetings, decision-making and community confidence," she said in a statement.
"The proposed PIO seeks to address long-term division and conflict among councillors and the associated reputational, and work, health and safety risks."
Ms Hancock said she also intended to appoint two temporary advisers to conduct the mediation process to address the hostility and acrimony among the councillors.
Two weeks ago, the council's general manager stepped down amid allegations she had been subjected to bullying.
Mayor thanks Minister for intervention
Mayor Duncan Gair said the decision came as a relief.
"I spoke to the Minister six weeks ago, so it wasn't a surprise, I wrote to the Minister yesterday, thanking her for her intervention," Councillor Gair said.
In recent months, the council has faced intense criticism for its response to the summer bush fire crisis and only making a submission to the Royal Commission into National Natural Disaster Arrangements after a public outcry.
Former mayor Juliett Arkwright said she believes close supervision of the council is overdue.
"It's good the Minister has set in motion this inquiry or this act but the trouble is you cannot unfortunately change the nature of the beast and if certain personalities are such that they regard everything in a personal way then all the training in the world isn't going to alter things," she said.
