This would see Queanbeyan Council take a regional leadership role by providing a range of 'back office' services that neighbouring councils could purchase.

Prior to the submission, Queanbeyan City Council engaged in community consultation during May and June.

Council consulted with the community and asked them for their thoughts on three possible options for the Queanbeyan Local Government, including: creation of a Regional Services Provider model; merger with Palerang Council or both Queanbeyan and Palerang standalone.

The consultation included an information package mailed out to ratepayers seeking their views, an online survey, telephone survey and two community forums.

"I was very pleased with the input we received during the consultation period, with 985 reply paid surveys submitted, 132 online surveys submitted and a further 602 residents participated in the random telephone survey," Mayor Tim Overall said.

"The results showed a strong preference towards the Regional Services Provider option which Council will be taking forward with IPART."

The council's decision on Wednesday night is in response to IPART's 'Fit for Future' initiative which looks at the sustainability and financial viability of each council.

A report by the Independent Local Government Review Panel previously recommended a merger between Queanbeyan and Palerang councils.

Queanbeyan and Palerang Councils both employed facilitator L K S Quaero to examine the business case for a possible merger and several other options.

A merged business case would not meet the Fit for Future outcome criteria, according to the council's report.

It also found an amalgamation would have negative impacts on Queanbeyan including a significant rate increase of approximately three per cent.

L K S Quaero determined a stand-alone option for Queanbeyan showed it could meet bench-marks set by IPART in a five-year timeframe. However, this option relied on Palerang submitting a stand alone business case.

The report emphasised the real possibility that Queanbeyan Council could still face a forced merge situation even if they chose this option.

"We do have to think outside the square and decide, in consultation with our community, what we believe is best for Queanbeyan," Cr Sue Whelan said.

"That's not to say we won't think about Palerang but our responsibility is to Queanbeyan."

Councillor Peter Bray amended the motion asking for facilitators L K S Quaero to undertake further Fit for the Future assess-ment work on various scenarios.

"There are many options that may well need to be explored as we enter the conclusion of this debate... on this subject," Cr Bray said.

"We would not wish to pre-empt or suggest indeed any particular option... there may be many that we've never even thought about at this point in time."

Mayor Tim Overall was supportive of exploring further options.

"At the end of the day if the government merges the two councils, one of the things we should be armed with, as a scenario, is having an independent assess-ment of what that the might mean...," Cr Overall said.

"We know if [the two councils] come together it won't be fit for the future or financially sustainable.

"It would have to look at some special rate variations to get to that stage... and that would best be done by having an independent assessment of what would be appropriate."

IPART will assess all submissions and make recommendations to the NSW Government by October 2015. The NSW Government has previously stated that it would like any changes in place in time for the local government elections in September 2016.