Nick Xenophon has back-flipped on his support of capping local council rates.

The SA Best leader now says imposing a set limit on council rate rises is populist and superficial.

Mr Xenophon’s party was fully in favour in 2014, using rate capping as a key point in its state election campaign, but now says he will not take the policy to next year's March election.

“The facts are that rate capping will not work, it is a deeply superficial policy and it basically turns local government, local councils into whipping posts for lazy state governments,” Mr Xenophon has told a meeting of councils.

Local Government Association of South Australia president Lorraine Rosenberg welcomed the change.

“Today's announcement by Nick Xenophon, I think in my opinion, rate capping is now dead,” she said.

Ms Rosenberg said if the state’s Liberal Party kept its campaign pledge to cap rates, councils may be forced to cut services.

She said rate rises often came as a result of the Government shifting costs onto councils.

“We live in our communities, we talk to our communities every day. We are very conscious about what cost shifting is doing, and therefore what the cost of living is doing,” Ms Rosenberg said.

The state’s Liberal opposition slammed Mr Xenophon for changing his stance on the issue, saying it was a sign he could not be trusted.