She previously embarrassed the party by claiming that the Reserve Bank of New Zealand was foreign owned.
Party leader Winston Peters hinted at Mr Williams' dumping yesterday when he said he was "very concerned" that one of his MPs appeared to have broken party confidentiality by speaking publicly about the selection process.
Breaching confidentiality was "very serious", he said.
Mr Williams told the Herald last week that the party deputy leader, Tracey Martin, saw him as a threat and wanted him "removed".
He blamed her and her mother, party president Anne Martin, for his fall from number 3 to 13 on a draft of the party list, a position so low that his return to Parliament would be highly unlikely.
New Zealand First's list is decided by a List Ranking Committee which includes the leader, deputy leader, president, vice-presidents and directors.
Mr Peters, Tracey Martin and Anne Martin would not comment on the matter today, citing confidentiality.
Anne Martin said last week that she was disappointed in Mr Williams, but today would not discuss whether he had breached party rules by speaking to media about his list ranking.
Mr Williams did not immediately respond to requests for comment.
He was the mayor of North Shore from 2007 to 2010.
He has been a controversial figure and, in 2009, sent a series of "obnoxious and aggressive" text messages to Prime Minister John Key. The same year he left a message on the answer machine of then-Christchurch mayor Bob Parker, complaining about the city's nightlife and "third world" restaurant service.
Mr Williams blamed his erratic behaviour on prescription painkillers and a lack of sleep.
He made headlines again in 2010 for urinating outside his council building after drinking at a nearby bar, then driving home.
Earlier this year, two New Zealand First employees received payouts after what they described as "bullying" by Mr Williams.
Rotorua teacher and economist Fletcher Tabuteau, who has been with the party since it was established 21 years ago, has sky-rocketed to number four on the list, assuring him of a place in Parliament if the party crosses the 5 per cent threshold.
Mr Tabuteau stood in Rotorua in 2011, where he won 2166 votes and 7.1 per cent of the party vote.
He has worked in retail and run a business consultancy, specialising in marketing and business communications.
Tauranga candidate Clayton Mitchell, who is also on the Tauranga City Council, is also high on the list at number six, meaning he will also be an MP if New Zealand First win at least 5 per cent of the party vote.
Mr Peters would not be drawn on why Mr Williams was dropped from the party list.
"The board follows a process it has followed for 21 years, and it as made a decision, and that is a decision the candidates have to live with."
He said Mr Tabuteau, who has stood for New Zealand First three times before, was a person of "personal ability who will do well".
He said Ron Mark was going to be an MP after the election, despite his list placing of number 9.
"Ron Mark is going to be back in Parliament as the MP for the Wairarapa, where he is easily the strongest candidate, and he will be back because of his list placing as well.
"We have an exciting team of candidates, and it will stand us in great stead in 2014 and onwards to 2017."
NZ First top ten
1.
Winston Peters
2.
Tracey Martin
3.
Richard Prosser
4.
Fletcher Tabuteau
5.
Barbara Stewart
6.
Clayton Mitchell
7.
Denis O'Rourke
8.
Pita Paraone
9.
Ron Mark
10.
Darroch Ball
