Melbourne City Council could dump Australia Day celebrations as part of its journey to reconciliation.
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Councillors on Monday night voted to support a motion put forward by Lord Mayor Sally Capp seeking to review the City's approach to January 26.
Cr Capp said it was part of the council's four-year plan to strengthen relationships between Indigenous and non-Indigenous people.
She conceded the council had no power to change the date of Australia Day, but said it was up to local government to be active in the conversation.
Reviewing its approach to Australia Day would help the council understand how constituents and stakeholders really feel.
"Australia Day is celebrated but is hurtful to other people," Cr Capp said.
"The debate is maturing and it is time for us to be more considered about what happens on 26 January."
Deputy Lord Mayor Nicolas Reece said suggestions the council shouldn't be part of the debate surrounding the national day was "unconscionable" and "nonsensical".
"We, as a council, are an active participant in the day," Cr Reece said.
"From the Aboriginal mourning service to the citizenship ceremony to the fireworks spectacular - how can we not take an interest on that day given the level of commitment we have in it."
All but two councillors voted in favour of the motion, with Jason Chang abstaining and Roshena Campbell absent from the meeting.
"I understand the sentiment and respect views on this, but I think our job is to focus on the city of Melbourne right now," Cr Chang said.
"We are all struggling."
Melbourne's Yarra City and Darebin councils are banned from organising citizenship ceremonies by the federal government after refusing to hold them on January 26.
It is unclear whether Melbourne City Council's review will include whether to hold citizenship ceremonies on Australia Day.
It was not until 1994 that January 26 became a national public holiday. The date is historically significant as it marks the arrival of the First Fleet at Sydney Cove in 1788.
Council staff will prepare a report to be tabled and debated at a council meeting on September 6.
Australian Associated Press
