Tower Hamlets has agreed to close East End Life by the end of March, leaving the Royal Borough of Greenwich the only authority in the capital still thought to be publishing a weekly paper.
In the past both councils have been ordered by the Department for Communities and Local Government to print their own publications on a no more than quarterly basis.
In August 2012, a Freedom of Information request revealed staff at East End Life had average salary packages of more than £47,000.
The previous year, the then-Communities Secretary Eric Pickles introduced a code of conduct which aimed to limit local authority-produced publication to four editions per year.
The paper, which is delivered to 90,000 homes and went fortnightly last month, will now adhere to the guidelines.
He added: “It is completely unacceptable that council taxpayers’ money should be used to provide unfair competition to commercial businesses that you represent.”
In March last year, HTFP reported how the Greenwich was set to take the government to judicial review over the guidelines.
Other London authorities including Hackney, Newham and Waltham Forest had also been issued with the directive not to publish more than quarterly.