Lisburn City Council has failed to comply with its own policy over flying the union flag, the Equality Commission has found.
The council began flying the union flag every day
Council policy meant the flag could be only flown on 19 designated days at its civic headquarters and other buildings.
In response to a complaint by Sinn Fein councillor Paul Butler, the commission found the council began to fly the flag permanently at six properties in 2005.
Commissioner Bob Collins said they had failed to implement their own rules.
"By adopting an equality scheme, Lisburn City Council has made a public commitment to promote equality and good relations in carrying out all of its functions," he said.
"If, having carried out an equality impact assessment into a policy, they find that there is an adverse impact on any group, they are committed to consider how they might reduce that impact and to look at alternative policies.
"In this case, the commission's investigation has found that the council did not fulfil those commitments, and we have made recommendations to put that right. "
The commission has recommended the council confines the display of the union flag to its civic headquarters, and only on designated days.
DUP councillor Jeffrey Donaldson, the local MP, said it had been part of his party's election mandate to change the policy on flags in May 2005.
"The council voted by a majority to reinstate the former policy - an equality impact assessment was carried out and it was found that only 8% of staff at the civic centre had a concern about this," he said.
Mr Butler said the Equality Commission's decision would have implications for other councils that fly union flags 365 days a year.
"It's clear that Lisburn Council are in breach of equality legislation under Section 75 (of the Good Friday Agreement)," he said.