Council leaders have welcomed a report by MPs calling for local authorities to be given more powers to tackle the advertising and sale of unhealthy food and drink to children.
But the Local Government Association (LGA) says money from the soft drinks levy should be used to improve children's health and calls for cuts in public health grants to councils to be reversed.
The parliamentary health and social care select committee says the Government should adopt a 'joined up' approach to childhood obesity focusing on the widening gap between rich and poor.
It comes as the Government prepares to publish a new version of its childhood obesity plan first issued two years ago.
The MPs support calls for a 9pm watershed on junk food advertising and say there should be a ban on 'brand generated characters' and the promotion of high fat, sugar and salt products.
They say local authorities should be allowed to limit the proliferation of unhealthy food outlets in their areas and restrict billboard advertising near schools.
Committee chair Dr Sarah Wollaston said: 'We want to see a whole systems approach and for local authorities to be given the powers they need to reduce childhood obesity in their communities.
'Health needs to be made an objective within the planning and licensing system.'
Linda Thomas of the LGA said: 'We reiterate the predecessor committee’s argument that the proceeds of the soft drinks industry levy should be directed towards measures to improve children’s health, and specifically addressing health inequalities.
'We also continue to urge government to reverse the cuts to councils' public health grants, which are restricting prevention and early intervention services to combat child obesity.'