London's 33 local authorities say planned government cuts to housing benefit subsidies will hit their work rehousing the capital's homeless.
Some 3,000 London families were helped by the subsidy last year
The London Councils organisation say they have budgeted some £60m to prevent homelessness but will only get about £22m in government grants.
Last year London boroughs moved 3,000 families from temporary accommodation.
That work will be very difficult if the Department for Work and Pensions (DWP) presses ahead with its plans, they say.
London Councils Executive Member for Housing, Councillor Jamie Carswell, said: "We are hugely disappointed that the DWP has decided to single out London with another reduction to housing benefit caps.
"It is particularly frustrating that they have chosen London, the region with the highest levels of homelessness, and the greatest demand placed on its housing than anywhere in the UK.
"DWP's proposed cut will see boroughs lose out on millions of homelessness prevention cash and our ability to protect the most vulnerable members of our society will be severely limited. I urge them to reconsider."
A DWP spokesperson said: "The new level of thresholds and caps will help to counteract the increases in expenditure that have occurred in this area in recent years, particularly in London.
"The subsidy system remains generous and we are confident that local authorities in London will be able to continue to secure good quality leased temporary accommodation and meet all their reasonable costs within the limits of the subsidy system.
"Changes in payments of housing benefit subsidy should not have a direct impact on funding for wider homelessness prevention activity.
"This is because housing benefit subsidy is designed to meet the costs of reasonable rents and the management charges for housing homeless people on a temporary basis."