The authority says it wants to protect sex workers
Plans to legalise prostitution for the 2010 football World Cup in South Africa have been criticised by religious groups and opposition parties.
The local authority in Durban wants legalised adult entertainment venues during the tournament.
But African Nazareth Democratic Movement (ANDM) president Thokozani Hlatshwayo said the proposal was "against the word of God".
Opposition parties fear that, if introduced, it could become permanent.
The main opposition Democratic Alliance and the youth wing of the Inkatha Freedom Party (IFP) have condemned the suggestion.
"Plans to legalise Durban's red-light districts before the 2010 World Cup should be condemned in the strongest possible manner," said Pat Lebenya-Ntanzi of the IFP youth brigade.
She said the South African government was sending out mixed messages to young people.
"On the one hand it preaches strong family values and moral regeneration, but on the other hand they want to legalise prostitution on Durban's streets. It doesn't make sense," she said.
An additional concern is Aids - some five million people in South Africa are HIV-positive - making it one of the world's worst-hit countries.
Durban's municipality said Germany had many adult entertainment centres during the World Cup in 2006, which were very popular with visitors.
It said while prostitution was illegal in South Africa, it could not ignore the fact that the sex industry thrives during major events like the World Cup.
To address this, entertainment centres such as strip clubs and escort agencies would be located in special areas where they would be safe and easily accessible.
Municipality Deputy Mayor Logie Naidoo said a final decision had not yet been taken.
"The national government will give us a lead in this matter, whether it relates to the 2010 Soccer World Cup or any other time for that matter," he said.
City officials admit that there are already young girls and women working as prostitutes on the streets of Durban.
They say plans are already in place to help them operate in safe environments.
In January, MP George Lekgetho called for prostitution to be legalised during the tournament.
"It is one of the things that would make it a success," he said.
He told parliament that it would help cut incidences of rape.
The BBC's Mpho Lakaje in Johannesburg says his suggestion was met with derision by other MPs. But a group representing sex workers welcomed it.
"We would support any legalisation of sex work, particularly during the 2010 World Cup," Nicola Fick from the Sex Workers Education and Advocacy Task Force (Sweat) told the BBC.
The idea of legalising sex workers was first proposed last year by police commissioner Jackie Selebi, who has since been suspended over corruption charges.