The Palaszczuk government was forced to sack the Logan City Council two years ago after a CCC investigation led to fraud charges against seven councillors and mayor Luke Smith.

However, prosecutors last month dropped the charges, with only Smith now facing trial.

The former councillors and the Local Government Association of Queensland demanded an inquiry, but Premier Annastacia Palaszczuk argued any issues could be examined as part of a routine five-yearly review of the CCC.

That review is being conducted by the Parliamentary Crime and Corruption Committee and due to be completed by the end of June. Last month, Labor used its numbers on the committee to block a Liberal National Party bid to constitute a stand-alone inquiry into the Logan case.

After meeting in private on Friday, however, the committee released a 6pm statement to announce it would hold a stand-alone inquiry into the CCC’s handling of the Logan case. It had received a complaint but did not identify the complainant, with the scope of the inquiry yet to be detailed. However, it made clear it would be a public inquiry and lead to a public report.

The Local Government Association of Queensland has welcomed the inquiry and will seek input into the terms of reference.

“Lives, reputations and careers have been ruined and a duly elected council wrongly dismissed,” said LGAQ president, and Sunshine Coast Mayor, Mark Jamieson.

“The LGAQ has been resolute in its call for an inquiry to ensure this travesty of justice is not swept under the carpet and we thank the PCCC for its decision today.”

Before coming to its decision on Friday, the committee heard from parliamentary commissioner Karen Carmody who, whilst not appraised of the evidence in the Logan case, said it was not unheard of for a prosecution to be discontinued.

The CCC, and chairman Alan MacSporran, have been under pressure for months over the handling of investigations, the agency’s priorities, and the level of public transparency.