Local paper The Area News reports that teenage girls in Griffith are selling themselves for drugs, cigarettes, jewellery or food, The Age says.
Earlier Fr Riley had commented that in Griffith last week his organisation found eight children who were going to prostitute themselves before it intervened and took them home.
"Some of them do it for as little as three cigarettes and a can of beer," Mr Riley told the newspaper.
But Griffith mayor Dino Zappacosta said police had been unable to locate children involved in such behaviour since the little information they received was rumour-based.
Investigations had turned up next to nothing, he said.
"I was made aware of two young girls about three or four weeks ago," Mr Zappacosta told AAP while in a meeting with Griffith's police crime manager.
"These girls were about 14 years old and it was only rumours that they were trolling the street and asking for favours."
He had informed police, but said there had been no arrests and police had no leads about an organised under-age prostitution ring in Griffith.
One anonymous source told the paper the problem was "rampant" and "widespread" while another said a child prostitution racket had been operating for 20 years.
Police told the ABC that there have been rumours about child prostitution in Griffith for more than a year, but they need more information from the public.
Mr Zappacosta told the paper he did not believe it was as bad as it was being made out to be.
"I think Fr Riley is causing division in the community again," he said. "I was only hoping if that he had any information he would have given it to the police."
"I'm not denying that it doesn't exist, I'm sure every community has in some form this sort of problem."
Fr Riley set up his Youth off the Streets program in Griffith last month as a promise to the community after a fatal street assault on New Year's Day.
Photo: Fr Chris Riley at last month's Griffith launch of Youth off The Streets
Teen prostitution examined in Griffith (The Age, 2/5/07)
Griffith child prostitution claims yet to be verified (ABC News, 1/5/07)
LINKS (not necessarily endorsed by Church Resources)
Youth off the Streets
Griffith City Council
Youth program launched in Griffith - but council not happy (CathNews, 20/4/07)
Youth advocate shares human rights award with broadcaster (CathNews, 8/12/06)
Media violence desensitises young people, says youth advocate (CathNews, 3/11/06)
Queen's Honour recipient says street kids are his incentive (CathNews, 13/6/06)
Experts seek to curb 'national epidemic' of child abuse (CathNews, 8/11/05)
2 May 2007