The state government has "badly mishandled" its maths and "shifted goalposts" in its policy approach to council mergers, a leading expert on council finances has warned.

The government has given councils until Wednesday to propose new merger plans after last month releasing the Independent Pricing and Regulatory Tribunal's finding that most Sydney councils were not "fit" to continue operating independently.

Deadline looms: The government has given councils until Wednesday to propose new merger plans. Credit:Nick Moir

But Professor Brian Dollery, from the University of New England Centre for Local Government, says the regulator failed to undertake proper research into the effects of mergers.

Professor Dollery argues a wave of mergers in 2004 – which saw 26 councils across NSW amalgamated –should have been the subject of "quantitative empirical research".