Senator Keneally plans to move from the upper house into the Labor stronghold of Fowler at the next election, even though she lives a long way from the electorate.
The seat, which takes in Liverpool, Cabramatta and Fairfield, is one of the most diverse in the nation and the Opposition holds it by a 14 per cent margin.
The incumbent MP, Chris Hayes, is retiring at the next election. He had publicly pushed for Tu Le, a local lawyer with Vietnamese heritage, to replace him, so that federal Labor would better reflect the diversity of the areas it represented.
"It's pretty disappointing and disheartening not just for myself but for the local community to be taken for granted in this way," Ms Le said.
Outgoing Labor MP Chris Hayes had backed local lawyer Tu Le to replace him.(Supplied
)"It's very unfortunate that the voices of the local members aren't heard."
Ms Le, who represents exploited migrant workers and is a youth leader at the Vietnamese Buddhist Youth Association, said she had dedicated her life to serving her community.
She added that while she had "great respect" for Senator Keneally, the move was a "missed opportunity" by Labor to broaden the cultural diversity within its ranks and "walk the talk".
"I don't think that not living in the electorate will preclude you from being a great representative for the area, I just think that we need more diverse voices in Parliament."