They want the prime minister to return them greater powers and freedoms which would allow them to provide better services to the public and become more democratic.
The call came as the Local Government Association unveiled its agenda for change document called 'Making a difference - a white paper for local government'.
Speaking at the launch, LGA chair Jeremy Beecham said: 'Tony Blair has said there is a need for councils to change and we accept this because local authorities want to make a difference to people's lives in partnership with communities.
'But we cannot modernise properly without help from the government. We need a new local government bill which gives councils more financial freedom and democratic powers.
'In our white paper, we set out local government's stall. Across the country, councils are delivering the government's policies: helping schools raise standards; making communities safer; tackling social exclusion.
'However, councils need more independence. If the government wants modern councils, it must end capping, return the business rate to local control and allow councils more democratic freedom.
'Part of this freedom means respecting local differences. Local government must be freed from the dead hand of centralisation so councils can meet the needs of their local communities and work effectively with other local partners.
'We are serious about changing local government for the better - 'Making a difference' shows how.'
1) 'Beacon councils' are local authorities who are leaders in the modernising process which have the capacity to assist and encourage other authorities to match their excellence.
2) Following on from the launch today, the Local Government Association are holding their annual conference in Bournemouth from 7-10 July where the future of local government will be discussed by speakers including Tony Blair, John Prescott, Gordon Brown, William Hague and Don Foster.