Sydney's Inner West Council will vote on a proposal next week to scrap Australia Day celebrations on January 26.

Key points: Celebrations could be moved but citizenship ceremonies would stay put under the proposal

Celebrations could be moved but citizenship ceremonies would stay put under the proposal Peter Dutton has been called "mean-spirited" for threatening to strip councils of the right to hold the ceremonies

Peter Dutton has been called "mean-spirited" for threatening to strip councils of the right to hold the ceremonies Resistance among councillors and some residents is based on claims it "alienates" the community

Under the proposal, Citizenship ceremonies would still be conducted on January 26 in the inner-west.

However Home Affairs Minister Peter Dutton has threatened to strip councils of their right to hold citizenship ceremonies if celebrations are moved from January 26.

Other festivities normally held in the inner-west on January 26, including a family fair in Enmore Park, will be moved to another date if the proposal is approved.

"We want January 26th to be a commemoration, rather than a celebration in the inner-west of Sydney," Mayor Darcy Byrne told the ABC.

"Australians are becoming more aware of the very deep hurt that is caused to Aboriginal people when January 26th is held up as our national day.

"We'll continue to hold our citizenship celebration and it will be a beautiful one, and we will seek to incorporate the voices of Aboriginal people.

"This is to send a clear message to the community that we think January 26th should be a day of solemn commemoration rather than jingoistic celebration."

Cr Byrne also lashed out at Mr Dutton over his edict on boycotting Australia Day celebrations.

"The truth is that Peter Dutton has shown time and again that he is mean-spirited enough to remove citizenship ceremonies altogether from councils that cancel their January 26 ceremony," he said.

"Our citizenship ceremonies are amongst the most important things that we do and we're determined to keep them [held on the day] whilst also acknowledging that the 26th of January is a solemn day of commemoration."

Cr Byrne said locals could gather at Victoria Park in the inner-city for the Aboriginal festival Yabun on January 26.

But Independent councillor Victor Macri said he would be voting against the proposal next Tuesday.

"The community is diverse and we should be trying to engage as many people as we can, not alienating … all the people that go down to this festival in our local government area," he said.

"It highlights the differences in people rather than showing them how to come together as one.

"To try and make people conform into some military-type democracy, where everyone has to think and feel the same way, it doesn't work."