MPs are considering plans to look at how senior council officers are paid following proposals to give the chief executive of Rochdale Council a £40,000 raise on top of his £130,000 salary.
The pay rise has been put on hold after Simon Danczuk, the town's Labour MP attacked the Labour-run administration of the council as "out of touch".
Now the Communities and Local Government Select Committee is to discuss whether to hold an inquiry looking into the issue of senior local government officers' pay and perks.
Mr Danczuk, who branded the plans in Rochdale a "scandal", said the days of big pay rises at town halls were over and a national debate was needed on how local authority bosses are paid.
Rochdale Council, along with most other local authorities, is having to shed jobs and make cuts, with many ordinary council workers having their pay capped.
The town suffers some of the worst deprivation in the country and includes two wards with an unemployment rate of more than 80% and more people on benefits than anywhere else in England.
Other senior officers at Rochdale were also due big pay rises.
The increases were due to be voted through at a council meeting on Wednesday - but disappeared off the agenda after the row broke out.
The council later said a "thorough and comprehensive examination" of the proposals would take place before any future vote takes place.
Mr Danczuk said: "I congratulate the council leader on finally listening and responding to public anger. It is quite right that he's realised this was the wrong thing to do. However, he needs to be clear that this is not a partial retreat, but a full climb down."
But the MP, who sits on the Communities and Local Government Select Committee, added that questions had to be asked about a culture at the top of local authorities where senior officers' pay sometimes increased by tens of thousands of pounds a year with no questions asked.
"Local government finances have changed dramatically in recent years and the days of bumper pay rises for senior officers are over," he said.
"We cannot have a situation where senior officers get successive automatic promotions without even having a job interview and that their pay scale no longer has any bearing on their ability or qualifications for the job.
"Because there is less money available for local authorities now, it is vital that their employment procedures are open and transparent. We need to see the right people in the right jobs and taxpayers getting good value for money. In many local authorities across the country I'm not convinced this is happening."
Rochdale Council said the planned pay rises were part of a wider shake-up of senior management which would see total costs fall by more than half and the number of senior managers fall from 24 to 10, saving £1.48 million.
A spokesman said Rochdale's chief executive is responsible for a £500 million annual budget and even if the pay rise were to go through in future he would still be one of the lowest paid chief executives of any similar-sized local authority.