A report claiming English councils have made a £667m 'profit' from parking this year has been slammed as 'misleading' by local authority leaders.

Research by the RAC Foundation suggests English councils saw a 12% increase in the amount raised through on and off street parking operations last year, up from the £594m sum raised in 2012/13 and marking the fifth year of rises.

London boroughs are thought to have generated 44% (£296m) of total figure, which was calculated by adding up income from parking charges and penalty notices and deducting running costs.

The five biggest surplus sums raised over 2013/14 were all in London, with Westminster coming top with £51m. Brighton and Hove and Nottingham were the only town halls outside of the capital to be included in the top 10.

The Local Government Association (LGA) said the figures fail to recognise that on-street parking revenue is used to fund parking services, with any surplus spent on transport projects.

However the RAC Foundation said councils has this year cut spending on on-street parking operations by 10%.

Professor Stephen Glaister, director of the RAC Foundation, said: 'Parking profits seem to be a one-way street for councils having risen annually for the last five years. Yet over the same period spending on local roads has fallen about a fifth in real terms.

'We understand the pressures councils are under with their overall income still falling and the level of services they have to provide in such areas as social care rising rapidly.

'One sign that the escalation in parking profits might be coming to an end is that much of this year's increase comes not from growing income from penalties and charges but cuts in the cost of parking operations. This suggests local authorities are making efficiency savings and should bring some good news to both drivers and council taxpayers.

'The bottom line is that parking policy and charges must be about managing traffic not raising revenue,' he added.

Responding to the report, Cllr Peter Box, LGA transport spokesman, said: 'This misleading RAC Foundation report is yet again based on the deep-rooted misconception that councils make a profit from parking.

'This report shows parking fines have gone down and that councils have become more efficient at running parking services. This means councils can spend the extra income on filling potholes and tackling the £12bn repair bill to bring our roads up to scratch.

'The RAC also fails to take into account a likely growing demand for parking from traffic increases on our roads and the important role parking services play in reducing congestion and keeping pedestrians and motorists safe as a result.'

Westminster City Council cabinet member for parking, Cllr Heather Acton, said the borough saw 'huge demand for parking' and the borough had to 'manage congestion and kerbside space'.

Cllr Acton added that 'every penny' was spent on parking and transport related projects, 'hardly the actions of a council trying to penalise motorists, but evidence that the council is doing its utmost to get the balance right for Westminster’s visitors, residents and businesses'.