Nearly a quarter of the European Social Fund is at risk of being sent back to Brussels, the Local Government Association (LGA) has warned.
The LGA said more than £730m in vital EU cash had yet to be allocated by the Government to councils and combined authorities.
It warned that the remaining funds must be used to support employment, skills and training by the end of the year or they will have to be returned.
Chairman of the LGA's EU exit taskforce, Cllr Kevin Bentley, said: ‘The Government needs to make sure the remainder of this fund reaches the local communities that need it desperately following the devastating economic impact of COVID-19.
'Councils and combined authorities are ready to work with government to make sure that local residents and economies can reap the benefits of this funding.
'As the country looks towards how we bounce back from COVID-19 this funding is more important than ever.'
