The Code of Recommended Practice for Local Authority Publicity, published in February, advises against municipal newspapers being published more than four times a year.
Despite this, councils including Greenwich and Tower Hamlets have continued to publish on a weekly basis.
Local government minister Grant Shapps told PRWeek: 'It is unacceptable that Labour councils are trying to push independent local newspapers out of the market in a bid to stop scrutiny of their spending.
'This choreographed attack on free speech by Tower Hamlets and Greenwich has no place in a modern democracy. These papers exist to promote personal political agendas and not the interests of the public and I urge local residents to report these publications to the district auditor.'
Last month, it was revealed that Greenwich has forwarded its plan to continue publishing Greenwich Time to its scrutiny committee, which is expected to meet this month.
A spokesman for Greenwich Council said it would be inappropriate to comment before the case has been placed before the scrutiny committee.