The Local Government Association (LGA) is calling for a publicity campaign to encourage take-up of council tax rebates, in particular amongst pensioners.
Around two million elderly fail to claim every year, and six million people in poverty live in homes which pay full council tax.
LGA vice-chair Sir Jeremy Beecham said: 'One in three households are eligible and many people just don’t realise that they can get help with their council tax bills. The benefit is wrongly seen as something just for the very poor.'