The hospitality industry is threatening legal action if the Christchurch City Council proceeds with a controversial policy tightening rules on where and when alcohol can be sold.

The Canterbury branch of Hospitality New Zealand (HNZ) is worried licensed premises trading hours could be cut back if the council decides to publicly notify the provisional Local Alcohol Policy (LAP).

The provisional policy restricts off-licence hours to 9am-9pm and shuts most bars down at 1am. Only bars and nightclubs within a defined area of the central city would be allowed to stay open beyond that time.

HNZ Canterbury president Peter Morrison has written to Mayor Lianne Dalziel and all the councillors to say the provisional policy was unreasonable and that HNZ members favoured taking legal action to fight it if the council proceeds.

"The advice we have received is that we have a strong position to challenge the lawfulness of the draft LAP should it be notified as it stands," Morrison said.

The provisional LAP was signed off by the previous council in September 2013. It spent months putting the document together and considered more than 4000 submissions from the public.

If Dalziel's council decides not to proceed with it but wants to tighten alcohol rules, it will need to begin work on a new LAP from scratch.

Councillors received the letter from HNZ the day before they were to consider a report from council staff recommending they notify the provisional policy. Following receipt of the letter, the report was pulled from the meeting agenda.

Penalising all licensed premises with trading hour restrictions was unreasonable when many of those premises could demonstrate they had no impact on alcohol-related harm in their areas, Morrison said.

The council's own assessment had found the provisional LAP would only result in a 1 per cent reduction in alcohol related harm and little or no consideration had been given to the economic benefits the night-time economy brought to the city. The District Plan had also changed since the alcohol policy was put together and its new provisions had not been taken into account.

Morrison said while a "vocal few" had been advocating for the provisional LAP to be notified, the wider community had no interest in seeing the council spend more money on a policy that was "questionable at best" and "destined for litigation".

Dalziel said she planned to hold a meeting this week to discuss whether the council should proceed with the alcohol policy.

The council had included some provisions in the Christchurch District Replacement Plan (CDRP) that were aimed at protecting residential areas from the effects of late night liquor sales but their appropriateness had been questioned by Earthquake Recovery Minister Gerry Brownlee and Environment Minister NIck Smith.

"The Ministers' advice ... is to recommend we use the Local Alcohol Policy as a mechanism for controlling activities rather than the District Plan," Dalziel said.

"We've had to take legal advice on that so that is part of the reason for the delay."

The council had decided to keep the provisions in the CDRP, based on legal advice, but they could be removed by the independent hearings panel appointed by the Government to hear submissions and make decisions on the plan. If that happened, the council might need to review elements of the alcohol policy.

When asked if that would mean the council would have to go back to the drawing board, Dalziel said: "I'm hoping not."