In a statement last week, the LGA said existing nationally-set planning fees had only covered around two thirds of the actual cost to councils of processing planning applications since 2012.
The statement said the shortfall had already cost councils £450,000 over the past three years and the cost of planning applications was increasing annually by around £150,000.
The LGA said two thirds of private sector respondents to a survey by property investors' trade body the British Property Federation had indicated their willingness to pay higher planning fees to help council planning departments provide an effective service.
LGA housing spokesman Peter Box said: "It is unacceptable for communities to keep being forced to spend hundreds of millions each year to cover a third of the cost of all planning applications. Government should recognise the huge pressure this is placing on already stretched planning departments that are crucial to building the homes and roads that local communities need but which have seen 46 per cent reductions in funding over the past five years."
"The spending review should allow local authorities to recover the actual cost of applications and end such a needless waste of taxpayers' money when developers are willing to pay more," Box said.
Planning expert Ben Mansell of Pinsent Masons, the law firm behind Out-Law.com, said: "In many property development projects, the planning application fee does not reflect the work undertaken by the local planning authority. The local planning authority has a key role to play and in some cases they do not have the resources to process the application efficiently. Many developers would be willing to pay a higher fee in return for a better service. However, if local planning authorities are able to set their own fees, this may lead to significant regional imbalances."
