Lilly of the Valley owner Narelle Wilson was visited recently by a council ranger, who told her the small flag flying outside the shop for five years must be removed or she risked a fine.

However, Wagga council's general manager Peter Thompson called a press conference on Thursday afternoon and said the council made a mistake, apologising to the store's owners.

"The staff that do this job have a difficult job," he said.

"Most of the time they make the right judgment, but on this occasion it wasn't right and we addressed it and we have apologised."

The reason the Lilly of the Valley's flag came under scrutiny was due to a complaint from another business owner, who was told their shopfront could not display a similar object on the footpath.

"Someone who wanted to do something in the footpath was told it wasn't appropriate ... they pointed to some of the flags [saying] if I can't do this you should be looking at those flags as well," Mr Thompson said. He said the council was obligated to remove any obstacles on footpaths that make it difficult for people to walk by.

"It is the case of what is in the community's interest," he said. "That flag, and its particular location given its size, is not providing an obstacle for anyone on the street and we shouldn't be exercising that power."

Ms Wilson said her decision to defy the order was not only for her business, but for others throughout the city forced to adhere to strict rules and regulations.

"I didn't know what was going to happen, but I thought there was no harm in trying," she said.

"We have other florists in the city who have flags up as well, so I acted on their behalf because I felt they needed it. I just want other people in the community with small businesses to be able to have those flags ... because you have to advertise."

Ms Wilson said the city's small business community is struggling with dozens of empty shopfronts throughout the main street.

"I work a lot of long hours for very little in return," she said.

"You can go to any other community and see the flags up. Those community's are thriving and we need to start thriving here, we don't need to lose any more small businesses. It is very difficult for small businesses now and we have to look out for each other."

Moving forward, Mr Thompson said the council will continue to consider requests to use the footpath on a case-by-case basis.

"If they want to ask the question again we will consider it again," he said.