Local authorities have told a House of Lords select committee that £250m should be set aside to support areas under pressure from immigration.
New migrants boost the economy but also put pressure on services
The Local Government Association (LGA), representing 400 councils in England and Wales, said a contingency fund would help shore up public services.
The LGA also called for a change to the system used to measure migration.
Leaders from Westminster, Slough and Boston councils gave evidence at the immigration inquiry.
Sir Simon Milton, chairman of the LGA, said he told the committee that while the country benefited from migration, the benefits were being felt nationally and the costs felt locally.
There needed to be a significant improvement in how the numbers coming in were counted, he said.
"We need to ensure those councils that are getting big increases have enough money to pay for public services," he said.
He highlighted language classes, housing and the turnover of pupils in schools as areas which can come under pressure.
He also said he wanted other sources, such as GP registrations and National Insurance numbers, to be used to get a clearer picture of migration movements.
Mick Gallagher, chief executive of Boston Council in Leicestershire, told the select committee: "We have experienced a significant growth that has been completely under-represented."
A low unemployment rate, lots of work on the land and reasonably priced housing have attracted a large number of workers to the area.
He cited Boston's estimated population as 79,000 - about a quarter higher than the official estimate of 58,000.
He said the council had looked at other sources including the number of children in schools with English as a second language which he estimates stands at 50%.
"It's very difficult to know who you have got living in a community at any one time and to try to determine the cost of that in financial terms is extremely difficult," he said.
Westminster, home to Victoria coach station, a gateway for eastern Europeans seeking employment in the UK, has long been campaigning for a change in the way London's population is calculated.
It says current methodology is flawed and in Westminster that at least 11,000 short-term migrants at any one time are missed out by official estimates.
It has also estimated a further 13,000 illegal immigrants are living there.
The council does not receive funding for the hidden population and says it loses up to £18m in government grants as well.
An influx of migrant workers can put a strain on public services
Tracy Turner, from the Society of Local Authority Chief Executives and Senior Managers (Solace), told BBC News ahead of the hearing that the greatest need was for clear, simple information, but she said there was no money in council budgets for this.
This meant eastern Europeans did not know to register with a GP and instead were going straight to hospital, she said.
Some also decided against sending their children to the local Catholic school thinking they were fee-paying as they often are in Eastern Europe, she said.
Of the recent influx of migrant workers particularly in rural areas, she said: "It's an issue for a lot of councils but it's not a problem.
"I think people are genuinely concerned to ensure that any new arrivals are able to integrate and get housing and employment, and become part of the local community.
"This applies to Eastern Europeans as much as people moving into new towns from other parts of the UK."