A UDA flag has been erected on a flagpole outside council offices in Limavady, Co Derry.
Council staff who attempted to remove the loyalist paramilitary flag were subjected to intimidation from "sinister elements", the Deputy Mayor said.
Efforts are being made by Causeway Coast and Glens Borough Council to find a contractor to remove the flag and flagpole.
Deputy Mayor and SDLP councillor Ashleen Schenning said: "The people of Limavady have no appetite for this type of behaviour in the town.
"I have been contacted by people from both sides of our community and they are clear that nobody wants these flags flying.
"Council staff attempted to remove this illegal paramilitary flag from our offices last night but were prevented from doing so by sinister elements.
"Those responsible for the intimidation of public servants have nothing to offer people here and must be faced down by our community."
SDLP East Derry MLA Cara Hunter said she has contacted the PSNI.
"Limavady is a shared and welcoming community. There is no place for the illegal flags of paramilitary murderers in this, or any, community," she said.
"I have been in touch with the PSNI about this situation and have asked them to facilitate the removal of the flag which is causing immense hurt and distress to people from across our community."
