Pothole repairs and other local road improvements could be given a £400 million boost if Government funding mirrored rising income from fuel and motoring taxes, research shows.
The "radical new strategy" would help support the almost 30% increase in the number of vehicles on Britain's roads since 2000, according to the Local Government Association (LGA).
The organisation, which represents more than 370 councils in England and Wales, wants the Government to match the increase in fuel and motoring tax income generated in the past 10 years in its funding for town halls.
This would mean an extra £418 million to improve local roads by fixing potholes, cutting congestion and protecting bus services, encouraging residents to use alternative transport where possible.
The annual road maintenance survey by the Ashphalt Industry Alliance found that local authorities in England and Wales need more than £12 billion of funding to bring the road network up to scratch.
This is several times more than councils' entire annual revenue spending on highways and transport, which was £4.4 billion in England last year.
In July Transport Secretary Chris Grayling unveiled plans to give English councils access to a multibillion-pound fund for local road schemes.
But the LGA wants the Government to be more ambitious to ensure a predicted increase in traffic of up to 55% by 2040 can be handled.
LGA transport spokesman Martin Tett said: "With 8.5 million more vehicles on our roads since 2000, it's no wonder our local roads are facing a growing congestion crunch and it would now take £12 billion and a decade to clear the nation's road repair backlog.
"Councils are doing all they can to provide their communities with the transport services they need, to manage and ensure that roads are as free-flowing as possible.
"The Government needs to develop a fully-funded plan to help councils deliver the desperately needed local road improvements we need. This should include matching the extra growth in tax take with the funding it provides councils."
A Department for Transport spokesman said: "This Government is taking the big decisions for Britain's future and investing a record £23 billion on our roads to increase capacity and improve journeys for motorists.
"We are providing councils in England more than £7.1bn over six years until 2021 to upgrade roads and repair potholes. They must use this money effectively to keep surfaces in a good condition and deliver much-needed upgrades to cut congestion.
"On top of this, we recently announced plans for a new major road network, giving councils access to a multi-billion pound fund to improve or replace the most important A-roads in their area."