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The New Zealand Herald can confirm Mr Williams is absent from the party's list, due for release either today or tomorrow, and will no longer stand in the seat of East Coast Bays.
This would effectively mean the end his career as a New Zealand First MP.
Current MP Asenati Lole-Taylor has been dropped to number 16 on the list, which means she will almost certainly not return to Parliament.
She previously embarrassed the party by claiming that the Reserve Bank of New Zealand was foreign owned.
Party leader Winston Peters hinted at Mr Williams' dumping yesterday when he said he was "very concerned" that one of his MPs appeared to have broken party confidentiality by speaking publicly about the selection process.
Breaching confidentiality was "very serious", he said.
Mr Williams told the Herald last week that the party deputy leader, Tracey Martin, saw him as a threat and wanted him "removed".
He blamed her and her mother, party president Anne Martin, for his fall from number 3 to 13 on a draft of the party list, a position so low that his return to Parliament would be highly unlikely.
New Zealand First's list is decided by a List Ranking Committee which includes the leader, deputy leader, president, vice-presidents and directors.
Mr Peters, Tracey Martin and Anne Martin would not comment on the matter today, citing confidentiality.
Anne Martin said last week that she was disappointed in Mr Williams, but today would not discuss whether he had breached party rules by speaking to media about his list ranking.
Mr Williams did not immediately respond to requests for comment.
He was the mayor of North Shore from 2007 to 2010.
He has been a controversial figure and, in 2009, sent a series of "obnoxious and aggressive" text messages to Prime Minister John Key. The same year he left a message on the answer machine of then-Christchurch mayor Bob Parker, complaining about the city's nightlife and "third world" restaurant service.
Mr Williams blamed his erratic behaviour on prescription painkillers and a lack of sleep.
He made headlines again in 2010 for urinating outside his council building after drinking at a nearby bar, then driving home.
Earlier this year, two New Zealand First employees received payouts after what they described as "bullying" by Mr Williams.
- Derek Cheng of the NZ Herald