City of Fremantle councillors have voted to scrap the port town's popular Australia Day fireworks event from 2017 after deeming the celebration culturally insensitive.

The council will instead host a family-friendly event to celebrate being Australian on a different date yet to be finalised.

The decision to cancel the fireworks was passed, nine votes to two, during a council meeting on Wednesday night.

"There has been a growing movement that January 26 is increasingly becoming a day that is 'not for all Australians'," Fremantle Mayor Brad Pettitt said.