Deputy lord mayor Linda Scott says she discovered the chains sitting in a box this year after council staff advised her to wear them while greeting the mayor of Portsmouth on behalf of lord mayor Clover Moore.
Cr Scott says she became"pretty concerned"and"quickly took the view that these chains are something best left to the relic of city history".
At Monday's council meeting - her last as deputy mayor - she will propose a motion to retire the chains.
"The image of a colonialist and a First Nations person standing side by side with a slogan'I take but I surrender'invokes a set of values that are not consistent with a progressive city like Sydney,"Cr Scott toldThe Sun-Herald.
"My first impression ... was that they were racist. I understand that other people may take a different view."
The lord mayor agreed the chains were racist and said her team of councillors would vote to retire them from use."We cannot erase history and nor should we attempt to - a society that embraces all Australians must be based on truth-telling and respect,"Cr Moore said.