A July bulletin sent by the Bureau of Animal Welfare reminded municipalities that it was illegal for them to give stray, abandoned or unwanted cats and dogs to unregistered animal rescue groups. .
Dog Rescue Association of Victoria president Trisha Taylor said enforcing the existing law would cause more animals to be killed.
"The Bureau of Welfare makes it so difficult for rescue groups.
"There's nothing in the legislation that stops pounds releasing dogs to rescue groups - we believe there is a misinterpretation.
"I live in a residential home in a residential street and I'm being told that to foster a dog I must be a domestic animal business. There's no way I could become registered as a domestic animal business. It's just ludicrous."
Casey community safety manager Caroline Bell said the council supported the department's efforts to clamp down on unlicensed animal welfare groups.
"The City of Casey does not provide unwanted cats and dogs on death row to unregistered rescue groups. It uses the RSPCA as its service provider for animals that are impounded and after the statutory eight-day period, the RSPCA becomes the lawful owner of the impounded animals."
Ms Bell said using unregistered volunteer groups could lead to complaints of animal hoarding and premises could not be monitored to ensure health and hygiene standards were met..." More