New Aussies handed racy stubby holders

A NSW council has apologised after a group of new Australian citizens were welcomed with stubby holders emblazoned with a naked woman.

The bright red beer coolers were part of a "Welcome to Australia" pack handed to 20 new citizens on Australia Day after their ceremony in Nelsons Bay, but the local council claims it knew nothing about the bag's contents.

The stubby holder shows a naked silhouette of a woman holding an Australian flag.

Port Stephens Council issued a statement on Friday apologising for the handout, saying the gift bag had been packed by a local business.

"There has obviously been a failure of oversight and quality control in this instance. Council deeply regrets this and ... accepts full responsibility," the statement said.

The member for Port Stephens, Kate Washington, told AAP she was glad the council had apologised but said the incident should never have happened in the first place.

"We're trying to combat these awful, awful rates of domestic violence... and yet we have a council who is endorsing a cultural norm that is attaching the consumption of alcohol to the objectification of women. It is really quite sickening," Ms Washington said.