A local pub has been ordered to stop using its courtyard BBQ because a neighbour didn't like the smell.

The Welcome Hotel in Balmain, Sydney, has run a popular Aussie barbecue for years and in 2017 upgraded it to a charcoal grill.

But last week, pub owner Liam O'Keeffe was ordered to stop using the much-loved cooking tradition after at least one neighbour complained to the local council.

Inner West Council ordered The Welcome Hotel in Balmain, Sydney, to close a charcoal grill (pictured with its head chef cooking on it) it has run for more than a year

Inner West Council sent Mr O'Keeffe a prevention notice, banning him from using the BBQ and warning he would be fined up to $8,000 each day if he continued using it.

'Every time you try to differentiate your business a bit so it doesn't turn into a block of flats, there's some garbage red tape,' he told Daily Mail Australia.

'I'm losing money every day the grill is not open, it's a terrific addition to the pub and makes up about 45-50 per cent of our weekend revenue.'

Inner West Council refused to say how many people or complaints it actually received about the barbecue.

City rangers initially inspected the hotel in November and found no breaches of health and safety, food safety or planning laws.

Mr O'Keeffe then voluntarily cut the hours of operation to eight hours on Saturday and Sunday, and three hours on Friday night.

He also removed seafood and marinated items from the menu in an effort to reduce the cooking smell. The menu now includes just chicken and corn on the cob.

Pub owner Liam O'Keeffe (pictured) said just he was bewildered neighbours had complained that they 'didn't like the smell'

The council threatened the Welcome Hotel with fines of up to $8,000 for each day it continued to operate the barbecue after April 3

However, the council requested he shut down the grill, and when he declined it issued a prevention notice on March 29 ordering it be stopped by April 3.

'Council is in receipt of numerous complaints associated with excessive smoke and odour generated by a charcoal barbecue located in the outdoor area,' the notice read.

'Blue smoke, fumes, and cooking smells were apparent from distances in excess of 50 metres.'

The council threatened Welcome Hotel with fines of up to $8,000 for each day it continued to operate the barbecue after April 3.

'The operation of the charcoal barbecue has the potential to negatively affect the amenity of neighbouring residential premises and the environment,' it continued.

'Its operation causes objectionable odour, smoke plumes, and possible health implications for adjacent neighbours.'

It said the 'nature, intensity, duration, frequency, and volume' of the smoke and odour created 'air pollution' as defined by environmental protection laws.

The Welcome Hotel could only operate the BBQ if it installed systems to capture or disperse the smoke, which Mr O'Keeffe said was not practical.

'Everyone wants pubs around but so many of them are closing because they can't cope with the excessive regulations,' he said.

'Council is in receipt of numerous complaints associated with excessive smoke and odour generated by a charcoal barbecue located in the outdoor area,' the notice read

Mr O'Keeffe voluntarily cut the hours of the BBQ's operation to eight hours on Saturday and Sunday, and three hours on Friday night

'If I do what they ask I'll have to go through a long development application process that a few years ago cost me $200,000 to put in a 10-seat dining room.'

Mr O'Keeffe launched a petition against the barbecue's closure, saying it was a symptom of NSW's 'nanny state'.

'Pubs are a part of the fabric of the Balmain peninsular and are increasingly under threat of red tape and the bureaucratic process,' he said.

Inner West Council said its officers tried to help the pub find a solution, but its advice was ignored.

'The Proprietor was advised to stop operating the BBQ until they had spoken with council planners about how to manage the smoke, and put measures like proper ventilation in place,' it said.

'Officers were trying to avoid a situation where council would have to take formal action. This approach has previously been successful with a number of other local pubs.

'The proprietor chose to ignore this advice and council's regulatory services were forced to issue a formal order.

'Inner West Mayor Darcy Byrne has agreed to meet with the proprietor to discuss the order.'