The tree was to form the centrepiece of festive celebrations at Peterlee's Castle Dene Shopping Centre, but turned out to be smaller than expected.
It was put up and decorated with coloured lights, but was described by one shopper as "the worst Christmas tree in the country".
Councillor Joan Maslin said she had received many complaints from residents about the state of the tree.
"I would describe this tree as just like a twig. To be honest, it looks like something that people would throw in a skip after Christmas.
"If the shopping centre couldn't have afforded to put up a better Christmas tree they shouldn't have bothered."
With news video.
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