The creator of the painting, the street artist who goes by the name Lushsux and who has also painted murals of the likes of Donald Trump and Kim Kardashian, branded calls to remove it "pathetic".
The provocative mural is on the wall of a small business in the Melbourne suburb of Footscray, and reports say the business has been asked by the local Maribyrnong Council to remove it.
"We believe it is offensive because of the depiction of a near-naked woman, not on the basis of disrespect to Hillary Clinton, in accordance with the Graffiti Prevention Act 2007," the council's chief executive Stephen Wall told Fairfax Media on Friday.
Wall said local police had been asked to urgently provide their opinion on the mural, adding that the council intended to issue a notice to the building's owner to remove it within 10 days.
Lushsux accused the council of being out of control, telling Fairfax the mural was "on par offence-wise" with a deodorant ad.
Speaking on Melbourne radio, Lushsux said he suspected that his Instagram account, which he said had some 110,000 followers, was deleted due to him posting a photo of the raunchy Hillary image.
"It's hard enough to be an artist... to lose your social media following in this day and age is a big loss," he told 3AW on Friday.
But the artist shows no sign of changing his style. Asked what he planned next, Lushsux told listeners: "I might paint a big mural of Trump in similar style."
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.