Communities secretary Eric Pickles has ordered Greenwich Council to scale back its weekly newspaper from the end of this month.
He has reaffirmed his commitment to tackle “Town Hall Pravdas” which, he says, undermine the independent press.
They also cost taxpayers money. The bill for Greenwich Time is £102,000.
The Secretary of State issued his order in January and gave Greenwich chance to reply. The borough responded that Mr Pickles’ actions were “irrational and procedurally unfair”. The council also said it would not be able to meet the March 31 deadline.
But Minister for Communities Kris Hopkins has now told the House of Commons that Mr Pickles rejected their arguments.
He said: “The Secretary of State has concluded that it would be lawful and appropriate in all the circumstances of Greenwich for him now to issue the direction as he had proposed.”
He was ordering Greenwich to reduce frequency of publication to four times a year.
Mr Hopkins added: “Greenwich is also barred from outsourcing or contracting for the publication by a third party to whom the council may make payment.”
A spokesman for the council said the issue would be discussed by the cabinet.
Greenwich is one of five boroughs highlighted by Mr Pickles but the only one so far to be on the receiving end of possible legal action.
Tower Hamlets’ controversial East End Life is currently under scrutiny by the High Court, in an action by electors against Mayor Lutfur Rahman’s re-election. Mr Pickles has also imposed Commissioners on Tower Hamlets to scrutinise the integrity of its financial dealings.