North Shore City Mayor Andrew Williams says the Government's decision to curb reforms to the Local Government Act is an embarrassing slap-down for Local Government Minister, Rodney Hide.
Mr Hide has failed to obtain cabinet support to force councils to hold referenda on major spending issues.
Under the proposed changes announced on Wednesday, councils would be required to focus on core services, such as roads, rubbish and libraries.
However, a proposal by Mr Hide that referendums be held before councils go ahead with costly projects has been rejected by Cabinet.
Mr Williams says the decision to rein in Mr Hide's proposals shows that he is out of touch with the politics of local government.