The dismissal follows an independent public inquiry, conducted by Robert Bulford, and advice received from the Department of Local Government.

The inquiry report details a litany of poor performance by the council including mismanagement of the Lightning Ridge Community Centre project which led to the cost escalating to $3.5 million, from an original budget of $405,000.

Other problems included an individual councillor having a long outstanding debt to the council, the performance of the general manager, poor meeting procedures, problems with the lodgement of pecuniary interest returns, poor debt recovery, poor staff relations and poor accountability to the community and councillors.

"After careful consideration of the evidence in the Inquiry report and the advice from the Department of Local Government, I have decided that this is the best way forward for the community," Local Government minister Tony Kelly said.

"I want to make it clear that, despite new councillors being elected recently, the council itself is a continuing legal entity.

"Unfortunately, the community and the council were forced to go to an election."

Hugh Percy has been appointed as the administrator, and will hold office until a new council is elected.

New elections are scheduled for September 23 2006.