Inner West councillors will vote next Tuesday on the proposal, which will instead encourage residents to attend the Aboriginal Yabun festival held on Australia Day.

Labor Mayor Darcy Byrne said attitudes to Australia Day have changed over time.

"For Aboriginal people, January 26 marks the beginning of colonisation, dispossession, the removal of children and deliberate destruction of language and culture," he said in a Facebook post.

"The community is becoming more aware of those sad facts and as a result attitudes to and the meaning of Australia Day is changing."

A citizenship ceremony will still be held on January 26, as required by the government, but Mr Byrne said this would "incorporate contributions from Aboriginal people about what the day means to them".

Mr Byrne later told ABC Radio it was a "controversial" issue but claimed he had spoken to hundreds of people in recent years who would be supportive of marking the day in a different manner.

Independent councillor Victor Macri described the proposal as "bizarre".

"I hate seafood, it doesn't mean I want to ban seafood," he told the Sydney Morning Herald.

"It's always been a big day, the community loves getting out there in Enmore Park. I reckon there will be a lot of disappointment."

The council motion proposes to hold a fireworks display in Enmore Park on January 25, and Mr Byrne said there would be no loss to ratepayers if the changes are implemented.

In 2018 a Greens motion calling on the same council to ditch its Australia Day event was voted down by a united front of Labor and Liberal councillors.

Australian Associated Press