Birmingham City Council has been accused of providing illegal downloads on its website as a bid to promote the city's music scene apparently backfired.
The authority has pulled down part of its site after city bands alleged tracks had been made available without their permission.
Yesterday, a media lawyer claimed the council was in breach of its own contract with artists and had potentially broken copyright law.
Meanwhile, the council stressed it had withdrawn the music from its website and was talking to bands to resolve the situation.
The tracks were part of a two-disc CD entitled B1 - Birmingham's Best New Bands, featuring the work of 13 acts from the city, including artists such as the Mexicolas, Murdoch, Jo Hamilton and Lizzy Parks.
It was released on Tuesday to coincide with Marketing Birmingham's "Feel the Heat" arts campaign, and the council has paid about #12,000 for it to feature free in industry magazine Music Week next week.
But bands and other members of the Birmingham music industry are concerned by what they believe are copyright errors and a the lack of information.
Media lawyer Andrew Sparrow has said the council would be better off pulling the CD until copyright issues are resolved.
The bands claim in addition to putting the tracks on the internet without permission, the council omitted to print copyright notices on the album.
Having reviewed a copy of the city council's contract leaked to The Birmingham Post, Mr Sparrow, from Birmingham's Lecote Solicitors, said the council would be well advised to withdraw the CD and correct any errors before sending it to Music Week.
Mr Sparrow said: "Birmingham City Council had a contractual obligation to include a specific phrase mentioning the name of the licensee, the year of publication and the name of the licensor on both the CD packaging and label.
"By omitting to put that notice on the product they are in breach of their own contract.
"I am not advising the artists, but if I were, I could suggest they seek an injunction to stop the council distributing further copies of the CD until corrections are made."
David Kuczora from Melting Ice Management, the firm representing Stourbridge group Midas which features on the CD, said the council's legal team could have jeopardised the band's chances.
He said: "B1 is a fantastic project, it was conceived with the best of intentions. But eventually Midas would like to sign to a record label and we don't want that jeopardised by the fact that a track is already out there and free to download before a single is even released."
Scott Rowe from Solar Creations - the company that manages Birmingham band Liner - said he was upset the council did not tell the band the CD would feature in Music Week.
As a result, he said, Liner had given the council the same track that had featured on a CD of Birmingham music that featured in Music Week 12 weeks ago.
He said: "That track is three CDs old and to send it out to people in the industry is embarrassing - it looks really bad for Birmingham."
A spokeswoman for Marketing Birmingham said: "Whilst we have created a consistent branding for the new arts campaign under the Birmingham - Feel The Heat identity, we have not been involved in the development or production of the B1 CD which was produced by Birmingham City Council."
A spokeswoman for the city council said: "This is a really exciting project for the city. We are aware there is an anomaly in the wording of the contract which we are already addressing. In the meantime, the music has been temporarily withdrawn from the website pending resolution of this issue."