A rise in compensation claims by road users means local authorities are unable to spend extra cash on repairing roads, a report says.
Local authorities say lack of funds are making roads dangerous
Last year £85m was paid out in claims by councils, nearly the entire amount of extra funding from the government.
The report by the Asphalt Industry Alliance (AIL) says hundreds of millions of pounds more is needed for road maintenance.
Motoring groups called for tax income from drivers to be spent on roads.
The report also said that four out of five local authorities believed road users' safety was threatened by a lack of funds for road maintenance.
Last year each local authority, on average, was given £800,000 extra funding for road repairs, said the report.
But it showed that on average each local authority paid out £750,000 in compensation claims - double the cost compared with 10 years ago.
Each authority in England was still about 50%, or £5.6m, short of what it believed was required to maintain roads
adequately, the report added.
The AIL's chairman Jim Crick said: "If local authority engineers continue to receive just half of the funds they need to maintain roads properly, insurance claims will continue to spiral out of control and our roads will become unsafe."
Edmund King, executive director of the RAC Foundation, said the report made "uncomfortable reading".
"Motorists contribute more than £43bn to the Treasury in motoring taxes each year," he said.
"Yet only £6bn is spent on roads. We have a right to expect and get a safe road network."
Paul Watters, head of roads and transport policy at the AA Motoring Trust, said taxation collected from drivers should be ring-fenced for road maintenance.
"Britain's roads are a valuable national asset and they must be properly funded and maintained.
"At the moment, many believe they are a national disgrace."