Local Government Association (LGA) advice to councils is that it is inappropriate to use the powers for less serious matters such as littering and dog fouling, except in extreme circumstances.
It says such offences should be tackled through methods such as wardens, fixed-penalty notices and standard CCTV - as opposed to covert camera surveillance.
An LGA spokesman said: "Parliament clearly intended that councils should use powers under Ripa, and they are being used to respond to residents' complaints about serious criminals, like fly-tippers, rogue traders and people defrauding the benefits system.
"Time and again, these are just the type of crimes that residents tell councils they want to see tackled.
"Without these powers, it wouldn't be possible to provide the level of reassurance and protection local people demand and deserve."
Ripa was introduced in 2000 to define for the first time when existing covert techniques, such as secret filming, could be used by everyone from the police to local councils and benefit fraud teams.
Ripa legislation allows a council to carry out surveillance if it suspects criminal activity.
On its website, the Home Office says: "The Regulation of Investigatory Powers Act legislates for using methods of surveillance and information gathering to help the prevention of crime, including terrorism."
WHAT RIPA REGULATES
Interception of communications, such as phone calls and e-mails
Acquisition of information from service providers
Use of informants or undercover officers
Access to electronic data protected by encryption or passwords
It goes on to say the act allows the interception of communications, carrying out of surveillance and the use of covert human intelligence sources.
In one case, benefit investigators covertly filmed Paul Appleby, a disability allowance cheat from Nottinghamshire, who had claimed £22,000 in payments.
He was in fact a member of an athletics club - and secret filming of him competing in events was crucial to the case against him.
But one example cited by the Home Office as wrong is an investigation into parents using a false address to get their child into a preferred school.
Ministers said that an official should have simply knocked on the door of the home in question rather than mounting round-the-clock surveillance.
Similarly, councils should stake out spots where dog fouling occurs and not follow suspect owners wherever they go.
Human rights group Liberty said Ripa legislation had been abused.
Isabella Sankey, its director of policy, said: "Surveillance is a vital tool in the battle against serious crime and terrorism but reports that mothers are tailed by council officers policing school catchment zones have seriously undermined public trust and confidence."
The Home Office has now launched a consultation on exactly which public authorities will be able to use the powers in the future.
Ms Smith said the government had to ensure the authorities had the powers they needed to protect people's freedom "from interference by those who would do us harm".
Lib Dem Chris Huhne: 'We need to get a sense of perspective'
But she added: "I don't want to see these powers being used to target people for putting their bins out on the wrong day or for dog-fouling offences."
The Conservatives say they would restrict the use of Ripa powers by local authorities only to crimes which could lead to a prison sentence and its use should be authorised by council leaders only.
The Lib Dems are calling on the government to ensure that Ripa powers are used only where strictly necessary and that their use is sanctioned by magistrates.
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