The Local Government Association has issued the warning as councils wait to find out how much they will receive from central government youth justice grants for 2019/20.
The total value of the grants has already been halved over the last nine years, from £145m in 2010/11 to £71.5m in 2018/19, and the LGA is concerned further cuts are imminent.
The association says that at the very least last year's funding levels need to be maintained if work by council youth offending teams to address an increase in knife crime among young people is to be protected.
According to NHS figures, there has been a 51 per cent rise in the number of young people that have been a victim of knife crime over the last your years.
Among young people killed in knife attacks this year include 17-year-old Yousef Ghaleb Makki, who was stabbed on 2 March in the Hale Barns area of Manchester.
The day before, Jodie Chesney, also 17, was stabbed in a park in East London, and on February 25 Hazrat Umar, aged 18, was stabbed on his way to the gym in Bordesley Green, Birmingham.
"The recent spate of tragic violence across the country underlines the importance of investing in services which protect and support young people, keeping them safe from the lure of gangs or from becoming involved in serious crime," said LGA children and young people's board chair Anntoinette Bramble.
"Youth offending teams within local authorities have an outstanding record of reducing youth crime and making a real difference to young people's lives, but they are under huge pressure after seeing their government funding halved.
"We share the government's determination to tackle youth crime, but it needs to properly fund the services that work most closely with young people at risk of offending."
The LGA has also released a report called Breaking the Cycle of Youth Violence, which details examples of effective work to tackle youth crime being carried out by councils.
This includes an early intervention and community involvement strategy by Bristol City Council to fight gang crime. Involved in this is a "deferred prosecution model" whereby young people involved in crime can escape a charge and potential custodial sentence by engaging with a community mentor for six to nine months, as well as programmes around improving their education and employment opportunities.
Another is the work in schools of Disarm, a partnership involving Liverpool City Council and other agencies in the city to tackle gang, knife and gun crime. Activity includes presentations in schools from an emergency nurse showing graphic images of knife crime injuries.
The LGA's call to protect youth crime work is backed by children's rights charity Just for Kids Law.
"Local authorities have a vital role to play providing support to young people to prevent them from getting involved in serious violence and offending," said the charity's legal director and founder Aika Stephenson.
"Through our work we see the consequences of children and young people being left without support and having to fend for themselves to deal with being excluded from school or being left homeless or without enough money to get by.
"The government needs to face up to the reality of year-on-year cuts to council services and also support better, more joined-up responses across health, social care and education to support young people who are facing multiple challenges."