They claim urban authorities receive 50 per cent more money per person than their rural counterparts.
The Government is committed to freezing the funding formula until 2020 but a campaign led by Beverley and Holderness MP Graham Stuart wants the gap cut to 40 per cent in the next seven years.
He said: “Overall rural residents earn less, on average, than those in cities, pay council tax which is £75 more per person but see urban areas receive Government grants 50 per cent higher per head than those in the countryside.
“The Government is proposing to freeze this position until 2020.
“We believe that freezing the system until 2020 is indefensible, locking-in past unfairness and stopping changes the Government has itself agreed, actually being implemented.
“We are not arguing for more Government spending overall but for fair allocations within the spending envelope.
“When money is tight it is even more important that funding allocations are fair.”
The Rural Services Network, which represents more than 200 councils and other public bodies and charity groups, recently published a report suggesting people in the countryside pay higher council tax and receive substantially less support for public services.
Rural Services Network director David Inman said: “Delivering services in sparsely populated rural areas also tends to be more expensive, which can add to the burden.
“Rural communities are getting a raw deal from the Government – even though it costs more to deliver services in the countryside.”
The campaign is urging people to sign a petition in support of change in favour of rural councils and claims it has the backing of more than 100 MPs from all parties.
However urban authorities also complain that changes to the way councils are funded in recent years have hit them unfairly.
They argue a new focus on the amount councils generate through business rates and funding linked to new house building has disadvantaged authorities with higher levels of poverty.
All Yorkshire councils have seen their finances squeezed in the past three years and together they estimate that under the Government’s current spending plans they will have made cuts of around £1bn by 2016.
The Government has told councils funding for local government will be cut by two per cent on top of existing cuts in 2015 but local authorities say the figure will be much higher in real terms.