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The communities secretary has told local authorities to stop "throwing away other people's council tax" on hiring lobbyists.
Eric Pickles wants to end the practice of employing lobbyists and his department's quangos will cancel contracts with lobbying companies.
A consultation will be launched to update the Local Authority Publicity Code, which forbids campaigning with public funds.
Pickles gave examples of quangos such as Thurrock Thames Gateway Development Corporation paying Connect Public Affairs £58,536 for lobbying services and Ordnance Survey hiring Mandate at a cost of £35,767.
"Lobbyists are being used to sidestep transparency laws and shadowy figures are peddling more regulation and special favours," he said.
"Local activism and localism don't need lobbyists.
"If local politicians want to change the way government operates, their council should send a letter or pick up the phone.
"Councillors can campaign for change at a personal or party political level, rather than throwing away other people's council tax on the corrosive and wasteful practice of government lobbying government."
The communities department said in a statement that using taxpayers' funds on local government campaigns or to lobby government wastes public money as it gets used beyond the local area and public policy is weakened when conducted by private lobbying firms.
"They are private organisations not subject to Freedom of Information or transparency rules. The government will continue to conduct business with local government through existing direct channels."
However John Ransford, chief executive of the LGA, defended the use of lobbying companies.
"Local authorities only use public affars agencies to win government support for major projects that are of vital importance to their residents," he said.
"Securing long-term investment for local manufacturing, the delivery of vital transport links and improvements to infrastructure are examples of where it is often appropriate for councils to campaign on behalf of their areas.
"The delivery of these projects, and the resulting increase in jobs and investment, far outstrips the costs of employing these agencies.
"Specialist companies working over a fixed-term period also often provide better value for money than employing permanent staff."
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