Labor candidate and current Canterbury-Bankstown Mayor, Khal Asfour, faces a parliamentary inquiry ahead of the March state election.
The investigation will probe into allegations of impropriety at the council, ordered by Local Government Minister Wendy Tuckerman.
Mr Asfour has been mayor of the amalgamated south-west Sydney council since 2017, and was previously mayor of the former Bankstown Council.
He has been endorsed to run for Labor on its upper house ticket for next year's poll.
Last month, Bankstown MP, Tania Mihailuk, quit the Labor Party over Mr Asfour's preselection.
She had accused him of furthering the interests of developers and having links to disgraced former Labor MP Eddie Obeid.
In a speech to parliament, she said Labor was "not ready to govern" and had not "cleaned up its act" in regards to corruption.
Mr Asfour denied the allegations and referred the matter to the corruption watchdog.
Canterbury-Bankstown Council is also conducting an independent inquiry into Ms Mihailuk's allegations.
Ms Tuckerman has now ordered a parliamentary committee to hold an inquiry into the allegations regarding Canterbury-Bankstown Council.
In a statement, she said the committee of upper house MPs would look into "any matters relating to integrity, processes of council, employees and elected officials of council".
Public hearings will be held next month and the committee must hand down its report before the election in March.
Opposition Leader Chris Minns has consistently supported Mr Asfour when allegations have been raised.
