The NSW Electoral Commission will not prosecute five serving and former Sydney councillors named in a corruption inquiry due to "insufficient admissible evidence".

The corruption watchdog last year found that Ryde councillors Justin Li, Terry Perram and Jeff Salvestro-Martin, plus former councillors Ivan Petch and Victor Tagg, should be considered for prosecution for allegedly breaching election funding laws.

Former Ryde mayor Ivan Petch is among the serving and former Sydney councillors named in an ICAC inquiry. Credit:Ben Rushton

The alleged offences related to political advertisements that appeared in local newspaper The Weekly Times in the lead-up to the 2012 local government elections.

But the NSW Electoral Commission said on Wednesday that it had decided that it would not proceed with the prosecutions.