The number of immigrants entering Britain has been underestimated, say local authority leaders who fear it will mean public services will be hit
In a letter to the Treasury seen by the BBC, four leaders say a new method to calculate migrant numbers is flawed and shows "perverse results".
The Office for National Statistics figures determine funding for councils.
Immigration Minister Liam Byrne said the government would try to keep a "closer track" of the situation.
The council leaders of Slough, Westminster, Kensington and Chelsea, and Hammersmith and Fulham say the "improved" method of calculating immigration, introduced last month, does not "remotely" represent the true picture on the ground.
The new figures suggest the London area is losing some 60,000 migrants to other parts of the country every month, they said.
The leaders have written a joint letter to Treasury Minister John Healey, urging him not to use this information to calculate council funding.
Cllr Stephen Greenhalgh of Hammersmith and Fulham said his borough had seen a 550% increase in national insurance registrations by eastern European nationals.
Sir Simon Milton, leader of Westminster City Council, said he had "anecdotal evidence to suggest that over 2,000 migrants are coming through Victoria coach station on a weekly basis".
"We are so concerned about the use of these figures for vital council funding that we are lobbying the Treasury in addition to commissioning our own surveys," he said.
Richard Stokes, leader of Slough Borough Council, said poor migration statistics were already leading to severe underfunding.
"Estimates have failed to keep pace with what is happening on the ground and public services are suffering as a result," he said.
"The migrants that come to Slough are hard working and bring great benefit to the local economy but the council remains severely underfunded because of these poor statistics."
Slough's Labour MP Fiona McTaggart told BBC Radio 4's The World at One that the ONS had to be "more fleet of foot" in tracking the movement of migrants within the UK.
Merrick Cockell, leader of Kensington and Chelsea Council, said he believed his community would suffer as a result of what he called the flawed statistics.
"This loss of funding will put a considerable strain on our ability to provide the excellent services we pride ourselves on," he said.
Two thirds of local authorities across the country contacted by the BBC said they did not have faith in the official number of migrants in their area.
More than half said they would consider doing their own count to establish a more accurate picture.
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