Sitting Liberal councillors considering suing the party over a statewide election bungle held fire while the NSW branch considered unprecedented action against electoral officials.
But that action will not go ahead, the party's state director Don Harwin said on Tuesday.
"The NSW Liberal Party received advice from senior counsel in relation to the irregularities in the process for nomination of local government candidates conducted by the NSW Electoral Commission," he said.
"Having given consideration to that advice the division will not be taking any legal proceedings," he added.
The NSW Liberal Party has been in crisis mode since it failed to submit nomination forms for one-in-three endorsed candidates for upcoming local government elections.
The failure - "beyond the comprehension" of a bewildered state Opposition Leader Mark Speakman - meant dozens of incumbent Liberal councillors and many more candidates can't run in the September 14 elections.
Voters in eight council areas have been left without a Liberal candidate on their ballot paper.
Some affected candidates were in contact with lawyer and former mayor George Newhouse about a possible class action.
"The candidates have lost their application fees and the chance of earning their councillor fees for four years," Mr Newhouse told AAP on Tuesday.
"Many of the people we have spoken to have made donations and paid for campaign materials."
Mr Newhouse, who ran as Labor's challenger in Malcolm Turnbull's federal seat in 2007, said launching the class action could depend on the outcome of the NSW Liberals' own mooted legal action.
The party explored its options to force nominations open again after missing Wednesday's deadline.
Such moves have been dismissed by the NSW Electoral Commission, which says the party had plenty of warning.
Premier Chris Minns also refused to intervene.
The fallout from the fiasco, which led to the sacking of party director Richard Shields, has also reignited factional disputes and scrutiny of senior leadership.
Mr Speakman was forced to deny he was warned about the looming nominations problem amid reports senior conservative Liberal MP Anthony Roberts had asked for updates on the process several times.
Leader Mark Speakman says he doesn't recall being warned the party was heading for an "iceberg". (Bianca De Marchi/AAP PHOTOS)
According to The Daily Telegraph, Mr Roberts warned another colleague "we're heading for an iceberg".
"I don't recall the iceberg comment," Mr Speakman told Sydney radio 2GB on Tuesday, before adding he was "hamstrung" on what he could say about internal matters.
"But I don't want any misinformation out there."
Mr Speakman confirmed there was "concern right across the party" about delays in endorsing candidates ahead of the statewide local elections.
But he stood by Mr Harwin, saying: "I like Don ... he's not a dope, he's a very intelligent human being."
Liberal Leader Mark Speakman says he likes the party's NSW president Don Harwin. (Mick Tsikas/AAP PHOTOS)
The state leader also pushed back on suggestions federal Opposition leader Peter Dutton was considering a takeover of the NSW branch to right the ship ahead of the 2025 federal election
"It's premature at the moment," Mr Speakman said of federal intervention.
"I do support investigating very thoroughly ... this campaign capacity."
More than four million people are expected to vote for more than 1000 councillors in the elections.
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