The flyer, distributed to villagers, claims Peter Thompson supports North Wagga residents bypassing council and taking over construction of a one-in-100-year levee as a state significant development.

Once approval is secured the council will handover $7 million reserved for the project, the flyer claimed.

It also stated that the North Wagga Residents' Association has "just about secured" the one-in-100-year levee, and asks each household to contribute $385 to get the project across the line - money it says will be reimbursed.

Mr Thompson said the flyer misrepresented a meeting last week where he was informed of the association's plan to bypass the council to build the levee.

He said his concern was that "completely false" information was being used to secure financial support from residents.

"It suggests that I have given over building the one-in-100-year flood levee to the North Wagga community and that's not the case," he said.

"The key message I want to get to the North Wagga community is we definitely haven't stopped doing the process that we're doing because we believe it's the only process that will lead to ... building a levee."

North Wagga Residents' Association's Fiona Ziff said the response is "a complete overreaction" and an "attempt to undermine" their efforts to build the levee.

Ms Ziff said Mr Thompson completely changed the essence of what had been discussed at a meeting on Wednesday last week.

She said the association was given support by the council to bypass them and pursue the construction of the 1-in-100 year flood levee.

"We believe the flyer represents what has been discussed in the meeting and we are definitely closer and closer to our 1-in-100 year levee and we are going to be forging ahead with that," she said.

"I think he is trying to .. divide and conquer by pitting residents against each other, but I don't think residents will buy it."

Miss Ziff said she is in the process of writing a submission to the state government for the North Wagga flood levee to be construction as a state significant development.

She said the money raised will be used to hire a PR company to put pressure on the state government through the media, as well as other expenses to help them towards an outcome.