There are also calls for Crime and Corruption Commission chair Alan MacSporran to resign.

A bipartisan committee has found that the commission didn't act "independently and impartially" in laying fraud charges against the former Logan mayor and seven councillors in 2019.

Its inquiry was launched in April after prosecutors dropped the charges due to a lack of evidence.

Committee chair Jon Krause says the findings are "extremely serious".

"Queensland needs an effective, independent, impartial watchdog on public sector corruption and major crime," he told parliament on Thursday.

"The CCC has failed in the role entrusted to it by this parliament, on behalf of all Queenslanders."

Mr Krause said the watchdog's power to both investigate and charge people had led to partiality and bias.

The committee recommended the government order a royal commission into the commission.

"A commission of inquiry or similar, to be headed by senior counsel of sufficient standing to consider this structural basis of the CCC," the report said.

In a response on Thursday, the Crime and Corruption Commission said it will "carefully consider the report and its recommendations" while noting "concerns about how some aspects of the inquiry were conducted".

"Alan MacSporran QC will continue to lead the CCC, and with the Commissioners and the CCC's leadership team, looks forward to an ongoing and productive relationship with the PCCC," the statement says.

Prosecutors in April withdrew charges against former Logan mayor Luke Smith, former deputy mayor Cherie Dalley and councillors Jennifer Breene, Russell Lutton, Phil Pidgeon, Trevina Schwarz, Laurence Smith and Stephen Swenson.

The charges came when the council sacked then-chief executive Sharon Kelsey after she passed information to the commission about alleged misconduct by Mr Smith.

Mr Krause said the inquiry uncovered "remarkable dealings" between the watchdog and Ms Kelsey's lawyers.

The CCC had even tried to make confidential documents it obtained under compulsion available to Ms Kelsey for her proceedings against the council in the Queensland Industrial Relations Commission.

"An inference could be drawn that this was done for the purpose of Ms Kelsey's reinstatement as CEO," Mr Krause said.

The committee found the commission failed in its duty to act "independently and impartially" and weigh all the evidence before laying charges.

The report said the decision to lay charges had been "affected by the desire to assist Ms Kelsey".

After the charges were laid, the mayor and seven councillors were removed from office with council dissolved and an administrator appointed.

Mr MacSporran did not ensure the commission acted "independently and impartially", the report said.

"That failing is serious and reflects poorly on the Crime and Corruption Commission," the report said.

Mr Krause said non-government committee members hadn't made any recommendation about the commission chair.

The Local Government Association of Queensland called for Mr MacSporran to resign.

The group want a public apology and compensation for the eight councillors, whose careers were unfairly cut short.

"We therefore call on the CCC chair to act in the interests of the future of this important institution and stand down," association president and Sunshine Coast Mayor Mark Jamieson said.

Attorney-General Shannon Fentiman said there were many concerning aspects of the commission probe.

She said Mr MacSporran's future in the role was up to the parliament and not the government.

Australian Associated Press