Campaspe Shire, Mount Alexander Shire and Central Goldfields Shire councils have also been disqualified for failing to comply with new code of conduct regulations following an investigation by the Local Government Investigations and Compliance Inspectorate.

Ten other councils in Victoria are facing the same fate, which will see them replaced with administrators for seven weeks until the local government elections.

Recent reforms required councils to review, amend and adopt their codes of conduct by July 4.

The updated code of conduct was supposed to clamp down on improper behaviour by councillors.

The revised code, introduced under the Local Government Act 1989, discourages councillors from making personal attacks on each other and sets out processes for dealing with bad behaviour.

The disqualifications also includes nine individual councillors from other councils. These councillors also failed to meet the new code of conduct requirements that were introduced following recent changes to local government laws.

Campaspe Shire mayor Leigh Wilson is furious with the decision.

He said the council was one of the first in the state to agree to and sign off on the new code of conduct, and the disciplinary action came about because of an administration error involving the way chief executive officer Jason Russell signed or witnessed the paperwork. 

“This is an absolute joke by this state government, demonstrating it’s against local government,” Cr Wilson said.

He said the council had not been made aware of the error until last Friday and had been given no time to remedy the issue.

“I’m absolutely ropeable, the fact we’ve submitted the paperwork very early on in the piece, they’ve sat on it and they’ve either knowingly deceived us… or they’re incompetent,” Cr Wilson said.

He said the ramifications of the error were not communicated to the council until a media release on the disqualifications was released on Monday.

The councillors had unanimously agreed to sign off on the the regulations, Cr Wilson said, so it was unfair to be “lumped in” with those councils that had refused to comply.

Acting Local Government Minister Richard Wynne said the government’s priority was to lift the standards of governance and the conduct of councillors.

"The government will consider the report from the Chief Municipal Officer and correspondence from a number of councils regarding the issue to ensure ratepayers do not suffer as a result of council administrative errors,” Mr Wynne said.

Municipal Association of Victoria chief executive Rob Spence said he believed a tiny minority of councillors had refused to sign the code of conduct, while most others did not meet all the administrative requirements, including signing it in the presence of their council's chief executive. 

He described the situation as an "administrative mad house".

"You would think we have better things to do with our time," he said.

Mr Spence said the government could rectify the situation by making a minor amendment to local government laws to change the implementation date. 

He said Ben Buckley in East Gippsland was the only councillor he knew of who had refused to sign the code of conduct.

Cr Buckley said he refused to sign the code of conduct because it created undue secrecy and bureaucracy.

Under the local government act, disqualified councillors would still be able to run as potential candidates for the next council term.       

Cr Chapman has been contacted for comment.

- With The Courier and The Age