Sylvi Hardy, who represents the populist party in Arendal's City Council, made her comments at a council meeting on Thursday evening.
“Do we really want to have people in our own living rooms, who think so differently, and who smell badly because they eat such different food?" she said as she made her case for limiting asylum acceptances.
In the same speech, she accused refugees of both beating and kidnapping their children.
After Hardy's comments were picked up by Norwegian media on Friday, Ingebjørg Godskesen, a Progress party MP from Arendal, said that she believed Hardy should be forced to resign from the party.
“I personally think she should say 'I no longer have any place in a proper political party, and I’ll resign immediately,” Godskesen told Norway's NRK broadcaster.
But Hardy was unapologetic.
"I have not said anything racist. I have simply told the truth," she said. "I have heard that people like us, who drink a lot of milk, smell of milk and that this doesn't smell good. When you eat lots and lots of spices and other food, you also smell different."
"Of course there is a problem," she added. "Most of us like to smell good when we meet other people. We take a shower, put on clean clothes and wear perfume."
Norway's Progress Party has attempted to moderate some of its more vociferous anti-Islamic and anti-immigrant rhetoric since becoming part of Norway's two-party coalition government last October.