A call for the resignation of the remainder of the Toronto Community Housing Corporation's board of directors will not be heard on Tuesday, after city council voted not to table the motion.

Deputy Mayor Doug Holyday had put forward a motion to dismantle the remainder of the embattled board and start the process of appointing a new one. Because the motion was added to City Council's agenda late, it needed two-thirds of council to vote in favour of waiving notice.

The vote received 26 votes in favour of hearing the motion and 16 votes against. Three councillors were absent for the vote.

The loss was seen as the first significant setback for Mayor Rob Ford's agenda, although Holyday was quick to point out that the motion received well more than 50 per cent support.

"We didn't get the two-thirds. We won the vote clearly… most people are onside here," Holyday told reporters after the vote. "There are some obstructionists here. There are 16 of them. We will get around this, there just has to be another way."

The motion was calling for the remainder of TCHC's board of directors to resign and be replaced by a managing director until a new board was chosen.

Several reports on Tuesday suggested former councillor Case Ootes was to be named as the temporary managing director.

Coun. Adam Vaughan voted against hearing the motion, saying he was opposed to the idea of having one person responsible for the fate of some 164,000 tenants.

"The rush to judgment to appoint a single person to run the entire corporation flies in the face of the tenant accountability model that our tenants have fought so hard for, for well over 15 years," Vaughan told reporters.

"The auditor's report says these members of the board did nothing wrong," he added. "If they did nothing wrong why are we taking them off the board?"

Seven of the TCHC's 13 board members resigned last week after an auditor's report revealed between $4 million and $10 million was wasted on sole-sourced contracts.

The report also revealed issues with record-keeping at the agency and found that $200,000 was misspent on luxury chocolates, spa trips and a party.

Following the resignations, Mayor Rob Ford said he would like to see agency CEO Keiko Nakamura and the board's two elected tenant representatives give up their roles so the agency can have a fresh start.

A group of Toronto Community Housing supporters attended Tuesday's council meeting to protest the motion.

The group, calling themselves The Coalition to Protect Toronto Community Housing, claim the forced resignations would be the first step in a series of events that result in the privatization of social housing.

On Monday, community housing tenants held two separate press conferences opposing pressure from City Hall for the agency's boss and remaining board members to step down over improper spending.

The tenants say they were never asked for their thoughts on how to improve social housing, but fear that privatizing the agency will have a negative affect on the 164,000 people it helps.

Ford has said he hopes to privatize a number of agencies owned by the city, including TCHC.

Coun. Doug Ford questioned the decision to vote against hearing the motion, saying he has received hundreds of calls from people who benefit from public housing who say the board must be held accountable.

Late on Tuesday, Mayor Ford called an emergency council meeting for Wednesday evening, where he hopes to push through the motion and avoid having to wait until next month's regular meeting.

With a report from CTV Toronto's Alicia Markson