The Department for Communities and Local Government says local authorities should print newsletters no more than quarterly, and Greenwich has now been directed to adhere to the order by 31 March.
If it refuses, it is understood that the government will seek a court order against the council forcing it to comply.
The move was announced to MPs by Kris Hopkins, Parliamentary Under Secretary of State for Communities and Local Government, pictured above.
The authority now has until 12 February to make representations to Mr Pickles about the proposed direction, while other councils publishing newsletters at a greater frequency than quarterly may also face similar action in future.
In September five local authorities were told by Mr Pickles to scale back the frequency of their newsletters or face legal action.
The Local Audit and Accountability Bill, which limits the publication of council newspapers to four per year, was passed into law in January 2014.
Mr Hopkins said in a written Commons statement: “The Coalition Government is committed to protecting an independent free local press. Localism and a healthy local democracy requires not just scrutiny by councillors, but also by the press and public.
“The Government has sought to take action on the practice by a small number of local authorities to publish local authority newspapers, which push out and undermine an independent press, and which constitute an inappropriate use of taxpayers’ money.
“We are prepared to use our formal legal powers to intervene wherever it is in taxpayers’ interests and those of a free and fair local democracy.
Earlier this month it was revealed the net cost of producing Greenwich Time in the financial year 2013/14 was £102,001.11.
Responding to Mr Hopkins’ statement, a Royal Borough of Greenwich spokesperson said: “The Council can confirm that it has received another letter from the DCLG stating that it proposes to direct us to cease publishing GT with effect from 31 March 2015. The Council will consider the contents of the letter and will respond in due course.
“We have a legal duty to publish statutory notices about matters such as planning applications, highways and traffic information which incurs heavy advertising costs for local authorities.
“Producing our own weekly newspaper remains the most cost-effective way of fulfilling this duty and making sure every household in the borough receives the information, plus essential information about housing, jobs, council services and local news.
“We remain committed to keeping costs as low as possible whilst aiming to ensure the whole borough can receive the information above.
“We are currently conducting a procurement exercise allowing us to fully examine the costs of all options and cannot comment further on that on-going process.