Marrickville is number two on the NSW Adult Business Association (ABA) list of top 10 local government areas with illegal brothels.

The ABA report also found that 800 businesses across the State were actually fronts for illegal sex services - an industry that brings in $520 million in revenue across NSW.

Marrickville mayor Morris Hanna has said he planned to stop Marrickville from becoming a "red light district", by capping the number of legal brothels allowed to operate in the area. Only 15 brothels are operating legally in the area but many more are operating without authorisation and an application for a new premise in Marrickville has prompted Cr Hanna to take action.

"If you look at Marrickville Road it is very busy, it has three chemists on it and three brothels," Cr Hanna said.

"I have had people coming to me saying that's enough, no more."

Premier Morris Iemma has announced a plan for a more hands-on approach to reducing the number of illegal brothels by giving courts the power to cut off their electricity and water supplies. Local government has welcomed the news that councils will also be given greater power to deal with illegal establishments.

"We'll also target the repeat offenders who, when caught in one location, often pay their fines then relocate their filthy trade to a new suburb," Mr Iemma said.

Mr Hanna said that more power to shut down illegal brothels was good news not only for Marrickville Council but, all councils in NSW.

"It is very good news - as a brothel can't operate without electricity and water, this will help a lot in shutting down these places," he said.

The recent application for a fourth brothel on Marrickville's Victoria Road was unanimously refused by the council due to it's proximity to Marrickville Public School.

The council also supported Cr Hanna's call to write to NSW Minister for Planning, Frank Sartor to seek a cap on brothels in the area.

But Marrickville Greens councillor Sam Byrne said such a cap could push more brothels underground.

"Trying to ban or cap brothels in the area is a futile process," he said.

"History has shown - for example in America when they tried to ban alcohol - that the result was an even worse problem and the same applies with brothels."

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