Housing campaigners have called for a council leader to resign.
A Brighton and Hove City Council scrutiny committee has launched an investigation into why a debate on the future of 16,000 council homes was pulled from the agenda of a meeting at the last moment in January.
The lobby group Defend Council Housing in Brighton and Hove (DCH) blames council leader Ken Bodfish and claims he has let down tenants.
Councillors had been expected to keep ownership of housing stock rather than transfer it to a housing association or private company, options which the Government prefers.
Just before the full council meeting, a letter arrived from Deputy Prime Minister John Prescott's office which Coun Bodfish and senior officers said had contained "fresh information", meaning the vote had to be postponed.
It was widely believed the item was removed from the agenda to placate the Government and a vote of no confidence in Coun Bodfish was passed.
Ruth Arundell, DFC's chairwoman, said: "The issue at the centre of the row over council housing is not whether the Government intervened to prevent the council voting against privatisation.
"The issue is whether the leader of the council - helped by certain officers - connived with the Government to prevent a democratic decision being taken. Coun Bodfish survived the vote of no confidence against him but he should not survive this investigation.
"He has resided over a process which has been corrupt from the beginning."
Coun Bodfish said he did not want to comment until after the inquiry.
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