Keith McNiffe of Pembroke Town Council is set to appear before magistrates in Haverfordwest on Monday.
He has been charged with claiming thousands of pounds in disability living allowance while continuing to referee at football matches.
The council said Mr McNiffe had "voluntarily suspended himself" until the outcome of the case was known.
Mr McNiffe and fellow referee Christopher Stockwell of Kidwelly, Carmarthenshire, are due to make their first appearance in separate hearings on Monday.
Mr Stockwell is also alleged to have claimed income support and incapacity benefit.
In a statement issued on Wednesday, Pembroke Town Council said: "Coun Keith McNiffe has voluntarily suspended himself with immediate effect from all council activities until the outcome of the pending court proceedings become known.
"He will then reconsider his position as a town councillor."
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