New South Wales Premier Mike Baird has been accused of breaking his word on a political donations cap.

Earlier this year, the Opposition asked Premier Mike Baird in Parliament if he would cap donations and spending in the lead up to September's local government elections.

The Premier replied; “Yes”.

This week, Local Government Minister Paul Toole tabled a bill that would cap donations at $5,800 per year for registered parties and groups, and $2,500 for candidates, elected members and third party campaigners.

The bill does not include caps on spending.

Opposition Leader Luke Foley said ignoring expenditure makes the bill “toothless”.

“It's an absolute breach of Mr Baird's word,” Mr Foley said.

“Why is it that Mr Baird and I run for Premier and are subject to strict spending limits but you can run for a ward of a local council and anything goes, there's just no limits?”

The Local Government Minister said the bill was part of broader measures to deal with concerns about integrity within councils, and that they will eventually extend to spending caps.

“I think it's going to make a huge difference,” Mr Toole said.

“We've committed already to the political donation caps and, yes, we are committing to also ensuring that there are going to be caps on expenditure in future local government elections.”

But Mr Toole ruled out bringing in any expenditure caps before the Joint Standing Committee on Electoral Matters reports on recommendations from an independent expert panel looking at political donations.

It is considered highly unlikely that expenditure caps will come into play before September.