As LGNZ president he is paid $80,000 a year on top of the $121,950 salary he receives as Hastings mayor.
He added, a number of recent projects with the advocacy group needed to be finished before leaving the organisation in "good stead".
Hastings district councillor Wayne Bradshaw, who ran against Mr Yule in last year's mayoral race, said the vote of the LGNZ members did not come as a surprise.
"Local Government is really important to regions and I would think that someone in a role as important as mayor should give 100 per cent attention to their job.
"We, as ratepayers, are not paying for a part-time mayor, this community deserves a full-time mayor."
Mr Bradshaw said Hastings would never know how many economic and social opportunities had been missed when Mr Yule was "removed" from Hastings.
"Cynthia [Deputy Mayor Bowers] has done a fantastic job in his absence. I consider her and Lawrence assistant mayors, rather than Cynthia being a deputy.
"If he wants to be a politician in Wellington he should stand for Parliament."
Mr Yule hit back and said Hastings has and will always be his "number one priority", believing his role as LGNZ president did not compromise his role as Mayor.
Napier Mayor Bill Dalton said his opinion - and the view of his council - was that the two-term rule was sufficient.
"The situation is the members have voted for a president to go from serving two terms to three. I think two terms are ideal, and at the end they stand down and fresh blood comes in."
LGNZ provides advocacy and support services for the country's city, district and regional councils.