Auckland Council has been told it already has power to ban street prostitution from spots such as Hunters Corner in South Auckland after a bid to get Parliament to change the law failed.
A Parliamentary committee recommended on Friday that a bill which would allow the council to pass bylaws banning commercial sex services in specified places should not be passed.
MPs said it understood why Auckland Council wanted Parliament to change the law, and noted that other councils supported the local bill.
But they felt that a law change was not appropriate because the issue was not limited to Auckland.
The committee also believed local bodies could already regulate street prostitution - despite council officials' advice that they would be open to a legal challenge.
"Many complaints about street-based prostitution relate to noise, littering, slow-moving motor vehicles (kerb-crawling) and disorderly behaviour. These kinds of behaviour can be dealt with by bylaws already in existence," the committee's report said.
The committee said sex workers qualified as "hawkers" or street traders and could be managed in a way that was not open to legal action.
"Prostitutes provide a service, so can be regulated on that basis," it said.
The former Rodney District Council had a bylaw which said sex workers met the definition of hawkers and therefore required a licence to operate in public.
The committee also said some non-legislative measures could be introduced to limit the problems associated with street prostitution in Papatoetoe and Manurewa, such as drug and alcohol abuse.
These included providing more public rubbish bins, keeping toilets open around the clock, improving lighting, and providing needle disposal units.
North Shore councillor George Wood said the decision was "a cop-out" and left people in South Auckland "just as vulnerable as they ever were".
He said if it was possible to use existing powers to deal with street prostitution, "that approach would have been under way already".
The bill would have given police power to arrest anyone who broke the proposed bylaws.