Invercargill deputy mayor Tom Campbell has confirmed he almost stepped aside from his role over a misunderstanding with Mayor Nobby Clark.

The incident involved an email sent by the mayor which talked about an investigation into a combined Three Waters entity for Otago and Southland.

Campbell said his position was well-known that he opposed the idea of a combined entity with the other region because of how large it would be.

“I think Invercargill will suffer from being too far away from the centre," he said.

"My view is that we need a Southland entity.”

The incident was cleared up within a few hours once Campbell realised he had misunderstood Clark.

“I replied to him that I thought that if he was going to pursue that, then it was inappropriate for me to be deputy mayor because he knew that I opposed it.

“He sent me an email back saying ‘no, look you’ve misunderstood, basically. It’s only an investigation that I’m doing’.”

Campbell said Clark told him the option of a stand-alone Southland entity was also being investigated.

He said there must be a “mole” in the council who was sharing what was happening.

Local Democracy Reporting approached Mayor Clark but was told he did not wish to comment further.

In February, Clark was broadly supportive about where the government landed in replacing controversial Three Waters legislation.

He said he would oppose a scheme where Invercargill might be asked to sacrifice for "the greater regional good".

Under the previous Government's plans, the Affordable Water Reforms - earlier called Three Waters - would have created new water entities responsible for water assets.

The Government repealed those water reforms in February and is developing new water reform policy - Local Water Done Well.

An advisory board will work on the replacement legislation, which would allow neighbouring councils to voluntarily band together to form council-controlled organisations (CCOs).

LDR is local body journalism co-funded by RNZ and NZ On Air