Fines paid by mobile operators for poor customer service or coverage should be handed over to councils to boost digital connectivity, leaders have said.
Currently, fines levied on mobile operators by regulator Ofcom for incorrectly billing customers and the poor handling of complaints go straight to the Treasury, with no guarantee it will be spent on improving the country's digital connectivity, the Local Government Association (LGA) said.
The Government's new Digital Economy Act, which is coming into force, will give Ofcom new powers to fine operators up to 10% of their gross revenue if they breach licensing obligations to improve mobile coverage.
The LGA is calling for the money to be handed over to local areas to support efforts to help residents and businesses access digital infrastructure.
The LGA said councils were ready to play a key role in ensuring the right infrastructure is in place to provide fast and reliable digital coverage, provided they were given adequate funding.
Mark Hawthorne, chairman of the LGA's People and Places Board, said: "Good digital connectivity is a vital element of everyday life for residents and can help them cut household bills, shop online for cheaper goods, stay in touch with distant relatives, access their bank accounts and even run their own businesses.
"As central and local government services increasingly become 'digital by default', more people will need to have faster and more reliable speeds, wherever they are.
"Despite having experienced significant funding reductions, councils are leading the way to expand high-quality internet access to as many as possible and are investing in the digital infrastructure essential to Britain's long-term economic success.
"If a new duty is imposed on planning authorities to set out how they will help deliver digital infrastructure it must be accompanied by funding to pilot new local models for facilitating the deployment of these networks.
"Rather than fines levied on mobile operators going straight to the Treasury, it would be far better for councils to be able to use the money to boost local efforts to ensure everyone has access to fast and reliable digital connectivity."
A Treasury spokesman said: "Fines levied by the regulator on mobile phone operators are paid into a central pot, as is the usual process, to pay for vital public services that people rely on.
"We have committed to providing world-class digital infrastructure to homes and businesses across the UK, and just this week our £400 million fund to finance full fibre broadband opened."