His proposals, to be enforced by a Scotland-wide standards commission, drew immediate criticism.
Mr Dewar said that although the vast majority of councillors were 'decent, honest and hardworking', there had been concerns about standards of conduct.
The proposals were 'machinery to assure the public that if there are problems in the future they will be dealt with impartially'.
Sanctions would range from public censure, through suspension for a maximum of three months, to disqualification for up to five years.
Dave Sneller, leader of East Ayrshire Council and new Labour group leader of COSLA, described the proposals as 'a sledgehammer to crack a very small nut'.
Like Mr Sneller, City of Edinburgh Council Conservative group leader Brian Meek called for more rigorous use of the existing ombudsman system. 'I simply do not believe local authorities have been shown to be less or more corrupt than any organisations of this size,' he said.
The government's consultation paper makes clear that the ombudsman's office would be confined to dealing with maladminstration complaints. It would no longer be responsible for ensuring that members comply with the National Code of Conduct for Councillors.
Matters raised with the commission would be 'a little more pointed and damaging' than allegations relating to service delivery, Mr Dewar said.
Scottish ombudsman service deputy commissioner Janice Renton pointed out that the new commission appeared to be funded on the same basis as the ombudsman, with similar powers and methods of conducting business. 'Why don't you just ask the local government ombudsman to do the task?'
However, COSLA president Keith Geddes supported the proposals, contained in the New ethical framework consultation paper. He said political parties also had an important role to play in ensuring the quality of councillors. 'Rigorous rules of conduct for councillors need to be replicated by rigorous selection procedures.'