The move would replace first-part-the-post voting
A deal on proportional representation for local government has angered the body which represents the majority of Scotland's local authorities.
The measure forms part of the coalition government deal between Labour and the Liberal Democrats, which has gained both parties' backing.
Lib Dem leader Jim Wallace said that there would "unequivocally" be PR voting for councils by 2007.
But the mainly Labour Convention of Scottish Local Authorities (Cosla) has voiced its opposition to the adoption of proportional representation.
The single transferable vote system will see the creation of larger wards represented by three or four councillors.
This is an arrangement where we were supposed to be in partnership with the executive, in how we drove forward both the executive national plans and our local plans, we see that as in tatters now
Pat Watters, the president of Cosla, condemned the move, saying it had been agreed through "behind the scenes deals".
"It's been decided in a closed room by two parties to try and drive this forward," said Mr Watters.
"It is not going to serve the people of Scotland having more distance between their elected councillor and the people who elect them.
"This is an arrangement where we were supposed to be in partnership with the executive, in how we drove forward both the executive national plans and our local plans, we see that as in tatters now."
The move was also opposed by Labour MSP Elaine Smith.
"It is about accountability and the link between the councillor and the ward.
"My fear is that under the proposed system we would lose that accountability," she said.
Ms Smith argued that Labour could have attempted to run Holyrood as a minority government rather than strike a coalition deal with the Lib Dems.
However, her party colleague Andy Kerr, who was finance minister in the previous Scottish Executive, said the parliament needed stability rather than the "chaos" of a minority government.
It will put power back in the hands of the voter and take power away from the party machines, and that is what scares a lot of my colleagues
Mr Kerr admitted it was "unfortunate" that Labour had been left in a position where it had to enter into a coalition.
"We made our views known about electoral reform and we've had to set that against our ability to deliver for communities throughout Scotland on anti-social behaviour, youth crime and the real priorities of the Scottish people," he said.
However, the agreement on PR was welcomed by Labour councillor Andrew Burns, who chairs the all-party campaigning group Fairshare.
He said it would "reinvigorate" local democracy in Scotland.
"It will put power back in the hands of the voter and take power away from the party machines, and that is what scares a lot of my colleagues," he said.
Scottish National Party leader John Swinney said the deal contained "no new strategy" to boost the economy and advised the coalition to embrace his party's ideas.
And Tory leader David McLetchie said: "Labour and the Lib Dems should now stop insulting the voters of Scotland by doing the honest thing and merging."