An Australian town is refusing to fly all flags from its council buildings amid uproar after the local authority rejected pleas to display rainbow flags for the annual ChillOut gay and lesbian festival.

Despite previously displaying flags for other local events, Heather Mutimer, the mayor of Hepburn Shire in Victoria, has rejected demands to fly the flag of the gay community for their pride event symbol at Daylesford Town Hall.

According to the Melbourne Star, the town has the largest lesbian and gay population in rural and regional Australia, but over the last three years has never been allowed to fly the rainbow flag.

Ms Mutimer told the Melbourne Star that only the Swiss Italian Festa had been allowed to fly flags at the Town Hall, “As these were official national flags [of Switzerland and Italy] the council considered it acceptable.”

But Chillout President Renee Ludekens said the Mayor’s recollection was wrong, “Those flags have been flown whether or not a dignitary was visiting, Also, other festival flags have been displayed.”

In reaction to this, councillors recently voted to ban all festival flags at the town hall, instead choosing to have a new pole for events at the tourist information centre.

Chillout organiser Jim Culbertson claimed most of the town’s residents were asking, “What do you mean they won’t fly the rainbow flag? This is the gay capital of rural Australia.”

The Mayor of Hepburn Shire told the Melbourne Star that councillors had allowed the gay event to display rainbow lights and a rainbow banner on the fence of the building, she said: “The Council has demonstrated it is not ashamed to be associated with the gay and lesbian community.”