Nearly a quarter of the European Social Fund is at risk of being sent back to Brussels, the Local Government Association (LGA) has said.
The LGA said more than £730m in vital EU cash has yet to be allocated by the Government to councils and combined authority.
It warned that the remaining fund must be used to support employment, skills and training before it is returned by the end of the year.
The LGA is also calling on the Government to provide further details about its proposed UK Shared Prosperity Fund, which will replace EU funding.
Cllr Kevin Bentley, chairman of the LGA’s EU Exit Taskforce, 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.’