The City of Perth council has been suspended indefinitely pending an inquiry into whether the councillors should be sacked following infighting.
Local Government Minister David Templeman on Friday appointed an inquiry panel with powers similar to a royal commission, which may recommend the council be sacked.
Three commissioners have also been appointed to run the council in the meantime.
Mr Templeman decided to immediately suspend the council rather than issue a "show cause" notice, where the council would have had 21 days to argue why it should not be removed.
Council infighting and reports of a toxic culture and dysfunction across the organisation from the top down, including the council, executive and wider 700-strong city workforce came to a head when CEO Martin Mileham took stress leave last week.
His replacement, acting CEO Robert Mianich then also went on stress leave this week and the council appointed Anneliese Battista in the role.
Both cited "workplace safety" issues.
The saga goes back to Lord Mayor Lisa Scaffidi being the recipient of various gifts and travel expenses, for which she was investigated and suspended but was partially successful in appealing.
Mr Templeman said on Friday he "had to draw a line in the sand".
"It is in the best interests of the ratepayers, residents and businesses that operate in the City of Perth that we made this decision," he told reporters.
The decision was as a result of ongoing and serious concerns of failure by the elected council to ensure that the local government performs its functions properly.
An inquiry panel would look at ongoing and serious governance issues.
The three commissioners that replace the council are Eric Lumsden, retiring chairperson of the Western Australian Planning Commission; Gaye McMath, former executive director of Perth Education City; and Andrew Hammond, retiring chief executive officer of the City of Rockingham.
Those commissioners will decide whether or not suspended councillors are still paid.
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