More than 150 council leaders – including 36 Conservatives – have warned George Osborne that vital services such as libraries, children's centres and sports clubs will have to close if he imposes further cuts on local government in next week's spending review.

In a letter to the Observer, 151 council chiefs say that a further round of austerity, in addition to the 33% cuts already imposed since 2010, cannot be absorbed without devastating social and economic implications.

Councils fear that Osborne will impose a further 10% budget cut in his imminent spending purge, meaning that an average council will have to make a further £30m in savings in 2015-16. The Local Government Association, representing more than 370 authorities in England and Wales, says the rising cost of social care has added to already intense pressure on budgets and that local government is having to pay the cost of inefficiency in Whitehall. In their letter the council chiefs say that, while local government has been hit by 33% cuts since the coalition came to office, Whitehall departments have only had to take an average cut of 12%.

The letter states: "This pattern cannot be repeated without it having a serious impact on local services and on people. Councils have so far taken £3.1bn from the annual paybill, reduced management costs by more than 12.5% and saved hundreds of millions of pounds by teaming up to deliver both back office and frontline services.

"Council tax increases have also been kept well below the rate of inflation for the past four years. The resilience of local government cannot be stretched much further. For many councils, new funding cuts in 2015-16 will lead to a significant reduction in, and in some cases even loss of, important local services."

Warning of lasting economic damage, they add: "Local government bore the brunt of cuts in the last spending review. For the sake of the public it cannot afford to do so again. It would be bad for the country, bad for people and bad for our prospects of economic recovery if funding for local services is cut further to reinforce inefficiencies within Whitehall."

The chancellor will announce further cuts of £11.5bn for 2015-16 in the spending review and arguments are continuing in Whitehall over where the cuts should be made.

Earlier this month, the House of Commons public accounts committee said that dozens of local authorities were on the brink of financial collapse and argued that ministers had failed to come up with adequate contingency plans to support vital services

The committee said that if funding continued to decline while demand for services rose, it was likely that councils would have to be bailed out.

Councils are also saying that they will have to make deep cuts to highways' budgets, reduce spending on galleries, libraries and the voluntary sector, turn off street lighting between midnight and dawn and reduce non-statutory schools transport. Ministers argue, however, that councils are sitting on huge reserves and that austerity is forcing necessary efficiencies on them.