The national census is a £500m waste of money that impacts badly on NHS health provision and should be scrapped, a report by the New Local Government Network claims.
It says information collected by the 10-yearly survey is out of date by the time it is published and underestimates the number of people using key community-based services.
This has a knock-on effect on the funding because it is used to allocate £100bn to primary care health trusts and councils.
The report advocates a rolling "local head count" of an area's population, taken from information already held by GP surgeries, electoral registers, schools and tax records. It would be more accurate and save at least £250m, the report says.
NLGN director Chris Leslie said: "Not only does central government not know where it should distribute public money, but local councils do not have the information or flexibility to work out where best to spend money to tackle worklessness and crime, or to gauge where future demand will be for care homes and schools."
The next census is due to take place in 2011, with the 2001 version having been criticised for under-counting the UK's population by 900,000.