The transfer of public health from the NHS to local government in April may see the unfit and obese lose council benefits if they do not improve their lifestyle.
A report; A Dose of Localism: the Role of Councils in Public Health, by Westminster Council and think tank the Local Government Information Unit, said local government is receiving responsibility for public health at a challenging time and faces a significant increase in demand.
It added that councils face a significant reduction in resource. Local government received a 28% reduction in resource over the current spending review period.
In response, it said, authorities should consider making provision for prescription of leisure activities.
The report added: "Relocalisation of council tax benefit and housing benefit combined with new technologies provide an opportunity for councils to embed financial incentives for behaviours that promote public health.
"The increasing use of smart cards for access to leisure facilities, for instance, provides councils with a significant amount of data on usage patterns.
"Where an exercise package is prescribed to a resident, housing and council tax benefit payments could be varied to reward or incentivise residents."
Talking to the BBC, British Medical Association GP committee chairman Dr Buckman, called the proposals "some of the silliest things I've heard in a long time".
"When I was first told about this I thought it was a joke," he said. "The best way [councils] can intervene is to stop restaurants and fast-food chains providing the kind of food that make people put on weight, and interfere with the way foods are sold in shops."
However, the funding formula proposed by central government could create a challenge to the funding of preventative services.
The proposed new formula, based on death rates for the under 75s, will see less priority given to areas of deprivation than the current formula.
The report states that, on average, the most deprived 20% of councils will get £8 less per head of population and the most affluent will get, on average, £8 more per head than is currently spent.
Pressure on resources could result in funding for preventative services, such as tackling obesity, losing out to demand-led services such as sexual health and alcohol and drugs misuse.
