Dunedin City Council says the decision by police not to evict a group of protesters from the city centre has national implications.
The Occupy Dunedin protesters have been in the Octagon for nearly four weeks as part of a global protest against corporate greed.
The council issued the protesters with a trespass notice based on the camping bylaws last Tuesday, and requested police help in enforcing it.
However, police have told the council they do not believe the activities of the protesters justify their involvement.
Mayor Dave Cull says the actions by police are being closely watched by other councils around the country.
Mr Cull has questioned which laws the police will enforce, saying their decision has created uncertainty.
"And it begs the question as to which bylaws, and this is a national issue of course because everyone's got them, ... will the police enforce; which do they believe will stand up in court against other laws and which won't; and leaves us in a bit of a quandary really."
Mr Cull says he is now seeking an urgent legal opinion.
At its height, the Dunedin protest involved 50 people in 28 tents.
Mr Cull says he will look at whether the council can remove the protesters without police assistance.
Protesters expect boost
One of the protesters Bert Holmes says he expects more people will join the occupation in light of the police decision.
"I would believe that there would be more active support from within the community who potentially saw the trespass notice as something negative," he says.
"But I believe a lot of us who stuck around knew there was a decision to be made and are very pleased with the turnout and welcome everybody back."
Mr Holmes says 11 tents are currently in the Octagon.
The mayor says if the bulk of the campsite is removed, the council will allow the long-term placement of an information kiosk and one symbolic tent in the Octagon.