Britain's roads are facing "crisis point" within months, with thousands of miles of asphalt pitted with dangerous potholes unless the government takes urgent steps to reform the way it funds essential maintenance, highway bosses have warned.

Decades of underfunding, increasingly severe winters and widespread flooding earlier this year – compounded by the current government cutting £500m from road maintenance budgets – means many councils are struggling to move beyond simply patching up a deteriorating network.

The Local Government Association Home which represents more than 370 councils across England and Wales, has warned that if authorities already bearing the brunt of public sector cuts are stripped of even more funding in next month's autumn statement, many will find it nearly impossible to keep on top of road repairs. The issue would become critical should the UK experience another harsh winter similar to 2010-11, which caused £600m of road damage, it says.

The LGA is calling on government to free up money and invest it in resurfacing the current network. It says this will not only allow councils to pay for resurfacing projects to make roads safer and save billions of pounds in the long term but also boost jobs and growth in the short term.

A good quality surface is also far more resistant to flood and ice damage, it says, while "reactive" or emergency repairs are 20 times more expensive than laying a good quality surface which lasts for many years.

Cllr Peter Box, chair of the LGA's Economy and Transport Board, said: "Keeping roads safe is one of the most important jobs councils do and over the past two years they have fixed almost 4m potholes, one every 16 seconds. They've also reduced the cost of filling a pothole by 25% and are constantly looking for ways to make their dwindling funds go further."

He said that for decades Whitehall funding for repairs has not kept pace with demand, while "damage caused by severe winters and widespread flooding has compounded this deterioration and councils are now contending with massive cuts to roads maintenance funding and millions of pounds in compensation payouts for pothole damage."

The AA president, Edmund King, said: "We are extremely concerned about this warning. Potholes are a scourge for all road users, whatever means of transport they are using. Cyclists and motorcyclists risk serious injuries, motorists face financial loss and communities can be blighted by potholes."

The LGA says that the Department for Transport is reducing the highways maintenance budget for councils by £442m over the five years of the Comprehensive Spending Review. By 2014-15, councils will get £164m a year less than in 2010-11, a 19% drop.

The transport minister, Norman Baker, said: "Despite the economic challenges we are facing, this government is providing more than £3bn to councils across England for road maintenance between 2011 and 2015, demonstrating our commitment to maintaining our existing transport infrastructure. We also provided an additional £200m in March 2011 to help repair local roads damaged by the severe winter weather in 2010."