The levy on the sugar content of soft drinks was intended to raise money towards physical activity and healthy eating in schools.
But education secretary Justine Greening last week diverted into general schools spending all but £100m of the £415m it was expected to raise.
The Local Government Association said the government should find new money to pay for its school funding pledges and leave the original intentions of levy unchanged.
Izzi Seccombe, chair of the LGA’s Community Wellbeing Board, said: “It is vital that the soft drinks levy, which marked a significant step in the fight against obesity, is protected.
“We now have grave concerns that the government is hijacking this money to plug funding shortages elsewhere. It calls into question the original purpose of the levy.
“This also threatens to derail the childhood obesity plan, where the levy was a major theme.”
Greening said in February that schools would receive the £415m “to help pupils benefit from healthier, more active lifestyle”.
Her statement then specified the money concerned was drawn from the soft drinks levy and “the government has also pledged to ensure that the amount schools receive will not fall below £415m regardless of the funds generated by the levy”.
But Greening last week said a new national funding formula for schools would be introduced with “a £1.3bn boost for core school funding”.
She said this would include efficiencies and savings across the main capital budget of £420m, “the majority of this will be from the healthy pupils capital funding – from which we will make savings of £315m.
“This reflects reductions in forecast revenue from the soft drinks industry levy, as producers are already reformulating sugar out of their drinks.”
