Perth Lord Mayor Lisa Scaffidi has threatened to quit the role after being told she faces further inquiry by the Department of Local Government.

The ABC understands Ms Scaffidi had planned to announce her resignation late last week after being informed the department would have to continue its scrutiny of her travel and gifts.

WA Local Government Minister Tony Simpson has now confirmed that if Mrs Scaffidi does quit, she would not longer face any disciplinary action under the Local Government Act.

Ms Scaffidi was re-elected as Lord Mayor for a third term last month, despite the release of a corruption report that was highly critical of her conduct for failing to declare tens of thousands of dollars in travel gifts.

The Corruption and Crime Commission (CCC) report found Ms Scaffidi engaged in serious misconduct by not disclosing a $US36,000 ($49,533) all-expenses paid trip to the Beijing Olympics from miner BHP Billiton in 2008, as well as other undeclared travel.

It also found she had "failed in her duties" by not disclosing the gift in her annual return, along with tickets to the 2009 Leeuwin Concert from BHP and accommodation for the 2008 Broome Cup which she accepted from property management company Hawaiian Investments.

The Broome hospitality consisted of three nights' accommodation at the exclusive Cable Beach Club Resort and Spa.

Ms Scaffidi later voted to approve a $180,000 grant to a consortium that included Hawaiian Investments for a CBD feasibility study.

Mr Simpson said he only became aware on Friday that Ms Scaffidi had signalled plans to resign, and urged her to continue in the role.

"I'm fully supportive of the Lord Mayor. The Lord Mayor is doing a fantastic job at promoting the City of Perth," Mr Simpson said.

"I have no reasons why she can't continue that job while the investigation from the department's happening."

The Department of Local Government has been investigating the CCC report to determine whether any disciplinary action is warranted.

The ABC has been told the department had informed Ms Scaffidi that a new investigation would be launched because it could not rely on the information obtained by the CCC.

We need to collect own evidence: Simpson

Mr Simpson denied it was a "new inquiry", but conceded there was a problem with the sharing of information between the agencies.

"When the CCC does a report ... you actually can't use the evidence that the CCC collects because that's their evidence, so we have to actually collect our own evidence to make sure that we have got it all correct," he said.

Mr Simpson confirmed that should Ms Scaffidi quit, that would end the departmental probe and any potential penalty she might face.

"Currently under the act, if you're not a councillor anymore then you can't be charged with anything to do with the Local Government Act, because you're not actually an elected person anymore," he said.

"Once you have resigned from your position as a councillor you can't be charged under the Local Government Act.

"I think this is probably the first time we've seen something like this happen."

State Opposition Leader Mark McGowan said the whole issue was a "schmozzle" and the Government should have moved more quickly to initiate its own probe into the issues raised by the CCC.

He stopped short of calling for her to resign, but said in the same circumstances, he would step down.

"I'm not going to tell her what to do, if it was me and a CCC inquiry came out like that about me, I would have," he said.

"All I'll say is, the whole thing seems to be a bit of a schmozzle, perhaps expensive in the long term, and I don't think it's a very good image for Perth."

Resignation would spark new election

The ABC has contacted Ms Scaffidi for comment.

If she does resign, deputy Lord Mayor James Limnios would become the acting lord mayor ahead of a new election being held.

Ms Scaffidi was sacked from the Local Government Standards Panel in the wake of the CCC report.

After the release of the report, Mr Barnett declared Ms Scaffidi an effective Lord Mayor but said she had made a poor decision to accept the travel and accommodation gifts.

"It was a mistake, she apologised for that," he said last month.

"And assuming there is nothing more to come forward, I think that is the end of the matter. And she is a good Lord Mayor, I accept that."