The New South Wales Government is reviewing a decision that raises doubts about the legality of CCTV cameras installed by local councils.

Shoalhaven City Council was forced to switch off CCTV cameras in the centre of Nowra, south of Wollongong, after the NSW Administrative Decisions Tribunal ruled they breached the Privacy Act.

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.

Shoalhaven Mayor Joanna Gash says the ruling is disappointing and makes it extremely difficult for councils to help police reduce crime.

The case was brought by resident Adam Bonner, who objected to the council recording and storing footage of him.

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 tribunal agreed, and ordered the council to apologise to Mr Bonner and refrain from any conduct that continues to breach the act.

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.

Kiama MP Gareth Ward, who was the council's deputy mayor when the cameras were installed, says he is appalled by the decision.

"This potentially has implications right around the state of New South Wales," he said.