New South Wales Premier Barry O'Farrell and the Police Association have slammed a tribunal decision that has thrown the legality of CCTV cameras into question.

Adam Bonner, a resident in Shoalhaven on the state's south coast, complained that the council's CCTV cameras in Nowra breached the privacy of the residents.

He argued it was not the council's role to collect evidence for the purposes of prosecuting crime and used expert evidence to show crime had increased after the cameras were installed.

The Administrative Decisions Tribunal upheld his complaint and the council turned off its cameras immediately.

The tribunal was not satisfied the signage near the cameras adequately informed people about their privacy implications, and ruled the council had not shown that filming people was reasonably necessary to prevent crime.

The decision could also have implications across the state, and the Attorney General will now look into the matter.

Premier Barry O'Farrell has ordered an urgent review of the decision, saying police will be less likely to identify offenders in any assaults that happen in the town from now on.

"Whether tomorrow or this week, if something occurs that involves an assault on a person, the community outrage will be understandable given this decision," he said.

Police Association spokesman Pat Gooley says areas without CCTV are at a disadvantage, as police rely on CCTV to be able to track offenders.

He says CCTV cameras are operated under strict rules to protect a person's privacy.

"The only time police review the footage is when they're searching for an offender," he said.

He says there is no question of the importance of CCTV in tracking offenders - pointing to the recent bombings in Boston as a key example.

But Mr Bonner says he hopes a precedent has been set.

"Councils - both Shoalhaven Council and other councils in New South Wales - have been put on notice that people do have a right to protect their privacy," Mr Bonner said.