Port Stephens mayor Ryan Palmer is in a battle to hang on to his job as Labor eyes off taking control of the council.
Labor's Leah Anderson, the only other mayoral candidate, attracted 49.6 per cent of the vote on the first evening of counting to Cr Palmer's 50.4 per cent.
Cr Palmer was leading by just 164 with 40 per cent of the votes counted. Counting stopped on Saturday night and will resume on Monday.
Ms Anderson said on Sunday that she was "absolutely thrilled" with her showing and remained confident that the vote could go her way.
The Herald contacted Cr Palmer for comment.
Port Stephens Labor MP Kate Washington said the result was "too close to call".
She said some of the outstanding booths could favour Cr Palmer, but the massive, as-yet-uncounted pre-poll vote would be crucial.
More than 10,000 of Port Stephens' 53,000 enrolled voters did so by pre-poll.
"It's been a very credible challenge whichever way it falls," Ms Washington said.
Labor could increase its councillor representation from one to four as it appears destined to win two spots in west ward and at least one in the east and central divisions.
It capitalised on the demise of ward-four independent Paul Le Mottee, whose nomination was ruled invalid by the NSW Electoral Commission last month due to a missing signature.
If Ms Anderson wins the mayoral vote, Labor could hold half of the 10 seats on the council plus the mayor's casting vote in the event of ties, a marked change from the days of colourful former mayor Bruce MacKenzie.
Labor women could hold four of the five Lower Hunter mayoralties. Loretta Baker leads Philip Penfold by 1.4 points in Maitland, and Nuatali Nelmes and Kay Fraser have won Newcastle and Lake Macquarie.
Ms Anderson was appointed in August as chief executive of Port Stephens Koala Hospital, which is partly funded by the council.
Retiring independent Ken Jordan criticised the appointment at the time and later led a council vote for Ms Anderson and koala hospital president Ron Land to stand down while an investigation was run into allegations of bullying in the organisation.
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