One of Australia’s biggest councils has revealed more than $565 million in debt.

Central Coast Council in NSW has revealed a forecast budget blowout of more than $200 million and accrued debts of more than $565 million.

It managed to go from a $65 million surplus to a $200 million deficit in four years. The full report is accessible in PDF form, here.

The council, Australia’s sixth largest, was suspended in October when a $89 million budget blowout was revealed. At the time, it looked unable to pay its 2,000 staff.

Newly-appointed administrator Dick Persson has now revealed the full extent of council's financial position.

It is bad news for residents who will pay the price for what appears to be serious financial mismanagement and the unlawful use of millions.

“They don't expect to see things go from what seemed to be okay to what I'm calling the greatest financial calamity in the history of local government in New South Wales,” Mr Persson said this week.

The investigation found that the former chief executive officer and former chief financial officer were aware of the illegal use of restricted funds and allowed it to continue. Both have been sacked.

Mr Persson said the elected councillors could not have been expected to be aware of the unauthorised use of the restricted monies, in part because it was not detailed in reports to council.

However, by failing to obtain any financial information themselves, they had “failed to perform one of their most important responsibilities”.

Some of the financial issues also stem from the expensive amalgamation of Gosford and Wyong councils to form Central Coast Council. The ongoing financial crisis has renewed calls for the entity to be de-amalgamated.

Mr Persson says a recovery plan is underway, including the sale of about $40 million worth of council assets, further borrowings, significant rate hikes, increased charges, and a reduction in staff.

He warned that the recovery will take at least the next five years.

“It's a sad day for the council and residents,” Mr Persson said.

“It's a sad day for a lot of people who've worked hard in the council, and it's a sad day for local government.”