Two-thirds of councils have not implemented equal pay agreements despite a deadline of March next year and are facing bills of £3bn in back payments alone.
A report from town hall employers body Local Government Employers said large metropolitan councils had been slowest to implement the 1997 single status agreement.
Councils expected to be the worst hit are in the West Midlands, with estimated back payments of £928m, while the North West faces payments totalling £740m.
Single status should benefit traditionally female-dominated sectors like social care.
LGE managing director, Jan Parkinson, said the impending “crisis” was “largely unexpected” and called on the Treasury to increase its £200m borrowing limit per council to finance claims, which can be backdated for up to six years. One authority alone needs £250m to fund back payments.
The report said it had become “virtually impossible” for councils to reach agreements with local unions. It advocated authorities making collective legally-binding agreements with large numbers of staff, either singly or with neighbouring authorities, which could not be appealed against.