More than 500 youngsters have Type 2 diabetes - a condition usually only seen in people over the age of 40.
The condition, which is linked to being overweight or obese, usually appears in adulthood but a growing number of children are being diagnosed with the condition, the Local Government Association (LGA) warned.
The vast majority of children with the condition have Type 1, which is not linked to lifestyle factors. But figures from the 2014/15 National Paediatric Diabetes Audit, analysed by the LGA, show that there are 533 children and young people, including 11 aged nine or under, in England and Wales with Type 2 diabetes.
This compares to 500 youngsters under the age of 19 with the condition recorded in the previous annual audit.
Charity Diabetes UK said it was "extremely worrying" that the figure is increasing.
And the LGA warned the number of children diagnosed with the condition will continue to rise unless bold action is taken in the Government's childhood obesity strategy.
The association, which represents 370 councils which have a responsibility for public health in their regions, has previously called for a horde of measures to be included in the strategy including; teaspoon sugar labelling and a reduction of sugar content in fizzy drinks, greater provision of tap water in schools and restaurants and for councils to be given powers to ban junk food advertising near schools.
LGA community wellbeing spokeswoman Izzi Seccombe said: "Obesity is usually linked with major health conditions later on in life, but already, we are seeing the early consequences of child obesity, with more and more children developing Type 2 diabetes as a result.
"Type 2 diabetes is normally associated with adults, so it is a major concern that we are seeing this in children and teenagers.
"This is a wake-up call for the nation as the Government faces a once-in-a-lifetime opportunity to take radical game-changing action in its forthcoming childhood obesity strategy. We cannot afford to delay any longer."
Helen Dickens, interim director of Type 2 diabetes prevention at Diabetes UK, added: "Type 2 diabetes typically develops in adults over the age of 40, so it is extremely worrying that we are seeing more young people develop the condition.
"Although there are a number of risk factors for Type 2 diabetes, some of which are out of our control, one of the most important risk factors is being overweight or obese, which we can do something about.
"That's why it is so essential that the Government publishes its childhood obesity strategy to help make it as easy as possible for children and their families to make healthier choices and lead healthier lives.
"This will help prevent ill-health in childhood and also reduce their risk of developing Type 2 diabetes and other serious health conditions later in life. It is also important to remember that Type 2 diabetes is still extremely rare in children, with most children with diabetes having Type 1 diabetes, which is not linked to lifestyle and cannot be prevented."
The Government's childhood obesity strategy is expected to be published at some point in the summer.
Dr Justin Warner, clinical lead for the National Paediatric Diabetes Audit and member of the Royal College of Paediatrics and Child Heath, said: "With a third of 10-year-olds either overweight or obese in the UK, it has become increasingly common to see children and young people developing Type 2 diabetes.
"The Government must act now before this becomes the norm. The long-awaited childhood obesity strategy will go some way in doing this. However, it must offer clear and bold solutions.
"This includes more research into prevention of obesity as well as making personal, social and health education a statutory subject in all schools covering the importance of physical activity and nutrition for a healthy lifestyle."
A Department of Health spokesman said: "We are determined to tackle obesity and our comprehensive childhood obesity strategy will build on measures we are already taking, like the Soft Drinks Industry Levy. The strategy will look at everything that contributes to a child becoming overweight and set out what more can be done by all."