Councils in the South-east have formed a pressure group to convince the Government to cut funding for the Midlands and the North.
Authorities in the prosperous region around London claimed they lose out on £300 million a year because the money is diverted to less wealthy areas such as Birmingham.
And they have told Ministers their taxpayers are getting a raw deal - and want the money back.
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But last night the claims were ridiculed by a Midland MP.
Roger Godsiff (Lab Sparkbrook & Small Heath) said: "I admire their cheek, but the reality is totally different."
The new body, called Save Our Services, includes Bedfordshire, Buckinghamshire, East Sussex, Essex, Hampshire, Hertfordshire, the Isle of Wight, Kent, Oxfordshire, Surrey, and West Sussex.
They claimed that their councils face stark choices over which services to cut unless Whitehall increases central grants to the area.
Unless funding rises, they will either have to scrap 8,000 social care packages for children, turn away 18,000 elderly people from care homes, or remove 6,500 people from learning disability support, they said.
The South East County Leaders said Government spending per person in the South-east, in terms of grants to councils, was £793 compared with an English average of £983.
A spokesman for the campaign said: "Every family relies on county council services, from highway maintenance to providing care for vulnerable people, to dealing with waste.
"But the Government takes more money from families in the South-east to give to families in the Midlands and the North.
"We want the Government to treat the South-east fairly,
by recognising the cost pressures we face.
"This would mean the elderly, who in East Sussex, form more than a quarter of the population, pay a similar level of council tax for similar services, as those who live elsewhere in England and Wales."
But Mr Godsiff said: "The South-east is the most prosperous area of the country.
"The Midlands and the North would be delighted to have the same levels of wealth distribution as the councils involved in this campaign.
"And that's the reason the Government allocates grants as it does.
"They believe in a society where you should try and ensure wealth distribution is spread fairly."
The Office of the Deputy Prime Minister, the Government department responsible for local authorities, also denied the claims made by the local authorities.
