A referendum on recognising local government in the Australian constitution will be held at the same time as the federal election.
The referendum will be held at the same time as the election on 14 September. If successful, it will allow the Commonwealth to fund councils directly.
Opposition Leader Tony Abbott supports the ''yes'' campaign.
However, AAP reports many within the Coalition are upset the federal government allocated $A10 million to the campaign seeking constitutional recognition of local councils, but only $A500,000 to the "no" camp.
Liberal Senator Chris Back has criticised the government's decision not to equally fund both sides of the campaign.
"It is regrettable and it is wrong and it is duplicitous," he told parliament.
The opposition is calling for "appropriate" funding, citing the example of the Howard government which gave each side $A7.5 million before a referendum on an Australian republic in 1999.
An opposition attempt to ensure equal funding to both campaigns failed to get enough support.