Harborough MP Sir Edward Garnier said Oadby and Wigston Borough Council was in a "shambolic" state.
Speaking in the House of Commons on Tuesday, the MP called for council leader John Boyce to resign.
But Mr Boyce insisted the Liberal Democrat-controlled council was "a happy place to work".
Sir Edward, who called on ministers to send officials from neighbouring authorities to overhaul the council, said: "The council leader and his councillors have either been wilful participants or asleep at the wheel, and must take responsibility for the shambolic state of the council."
In reply, Local Government Minister Marcus Jones said the council had been working with the Local Government Association and he expected significant changes to be made.
He ruled out sending outside officials to the council, claiming it was a highly unusual step taken just twice in the past five years - in Rotherham and Tower Hamlets.
In 2015, nine senior staff members at the council lodged a grievance containing 214 allegations, including bullying and harassment by the senior management team.
Independent investigator Richard Penn did not uphold the grievance, but warned the council was "very adversely affected by deep division" between senior managers and officers.
Mr Boyce said: "We have never made a secret of the fact we've had some staffing issues.
"This is an attractive place to live and there is nothing wrong with this council in terms of atmosphere."
He added: "There is no poisonous atmosphere here in Oadby and Wigston."
A Conservative MP has urged the government to "sort out" a troubled borough council hit by "internal squabbling and incompetence".