Since 2010, spending by councils on services for young people has reduced by 40 per cent, cutting £260m from youth work budgets and resulting in the closure of 600 youth centres across England.
The LGA has called for money currently given to the government's flagship youth social action initiative to be devolved to councils to offset these losses.
It said the NCS programme, which received £634m of funding between 2014/15 and 2017/18 - 95 per cent of the government's youth services budget - had seen take-up figures as low as four per cent in some areas.
Figures for the NCS in 2016 showed 12 per cent (93,000) of eligible young people took part in the programme, which sees 15 to 17 year olds undertake four weeks of activities in the summer and autumn holidays.
The LGA said the money would be better spent on year-round provision for young people in their home towns rather than a time-limited programme which is restricted to a certain age group.
Anntoinette Bramble, chair of the LGA's children and young people board, said while it was recognised the NCS offered a positive experience for participants, it should be included as part of a wider offer of support to young people.
"A time-limited programme of work cannot provide the trusted, longer term relationships that are a valued element of youth work, and that are needed by some young people to develop the self-esteem, confidence and skills to take part in such programmes," she said.
Bramble said it was "wrong" for so much of the government's spending on youth services to be going on a scheme that attracted a small number of participants.
"Targeted support is needed to a much wider group of young people locally all year round, whether that is giving them safe spaces to meet, diverting them away from crime or supporting them to succeed in school, training or employment," she said.
The LGA first called for some NCS funding to be given to councils in 2017, as part of its long-term strategy for youth services.
Similarly, a group of youth work organisations last year called for the Department for Digital, Culture, Media and Sport to use its promised three-year civil society strategy to significantly cut the NCS budget.
The government has set aside £1.2bn to deliver the NCS programme up to 2020.
An NCS Spokesperson said: "Both NCS and local youth services provide
an invaluable service to young people.
"Over 400,000 16-17 year olds have participated in NCS to date, with tens of thousands more expected by the end of the year. This makes NCS the fastest growing youth movement in the UK for over a century.
"It is unhelpful to compare NCS with other local youth services, as it is a bespoke programme established with the specific goal of helping to build a more cohesive, mobile and engaged society. By bringing together young people from different backgrounds for a unique shared experience, NCS helps them to become better individuals and in turn better citizens."