The O'Farrell government's response to two reports into the state's councils has been decried as a ''smokescreen of inaction'' after it promised they would lead to yet more lengthy consultation.
Minister for Local Government Don Page on Wednesday released the long-awaited reports addressing the financial and administrative problems facing local government.
But Mr Page, who has been in possession of the reports for months, said the state government would spend more time considering its response, and seek input from local councils and communities.
"Some ideas will require careful consideration and development,'' he said. ''We need to take the time to get this right.''
The Local Government Acts Taskforce and the $1.8 million Independent Local Government Review Panel were appointed by the minister in 2012.
But Mr Page has already ruled out forcing through the most contentious local government reform, council amalgamations, which fell within the scope of the review panel.
"We made an election commitment of no forced amalgamations of councils and that commitment continues as we discuss the options proposed by the panel," Mr Page said.
But the panel said it was ''absolutely clear'' NSW did not have the financial and human resources to support 152 councils.
It said Sydney's councils should be ''significantly reduced'' from 41 to between 15 and 18 by mid-century. ''Sooner or later amalgamations will have to be part of the package,'' the report said, though stopping short of recommending forced amalgamations.
''We have respected the government's policy of no forced amalgamations and suggested various ways to promote voluntary mergers,'' panel chairman Graham Sansom said.
The panel also recommended mandatory training for councillors, and direct election of mayors in metropolitan areas among 65 recommendations to improve the sustainability of local government.
It said that the system of ''rate-pegging'' - where the independent pricing regulator determines maximum council rate increases - could also be changed.
Acting Opposition Leader, Linda Burney, criticised the government for failing to either accept or reject the review's recommendations.
''People deserve certainty about the future of local government, but the O'Farrell government is using costly consultations and reviews as a smokescreen for inaction,'' Ms Burney said.
Executive director of the Sydney Business Chamber Patricia Forsythe said the Chamber supported larger councils, but any amalgamations depended on the determination of government. ''It comes down to whether [the government] has the will to act,'' Ms Forsythe said of the review.
Local Government NSW, the peak body for the state's councils, has called on the government to extend its March 7 consultation deadline until the end of April.
Its president, Keith Rhoades, said amalgamations remained its ''main concern''.