The statistics, obtained by the Countryside Alliance under the Freedom of Information Act, revealed that councils spent £40m on clearing up and taking legal action for illegal rubbish dumping, but collected just £692,000 in fines in 2010-11.
There were at least 656,000 fly-tipping incidents in the past year but just one in 50 cases led to a prosecution.
In some cash-strapped rural local authority areas, the figure was just three prosecutions per 1,000 cases.
The results of the research, to which four-fifths of local councils responded, show a marked fall in the amount of fly-tipping blighting the countryside since a similar survey in 2006-07 which revealed 2.5 million incidents at a cost of £100m.
But the Countryside Alliance warned that with rising taxes on sending rubbish to landfill and cuts to council budgets, the problem of fly-tipping was likely to get worse.
The rural organisation also said that if councils collected rubbish less frequently, with a trend towards fortnightly collections that the Government has failed to arrest, authorities needed to be aware there could be more illegal dumping of waste.
Fly-tipping remained a widespread problem facing the countryside and the costs of tackling the problem were unacceptably high for tax payers and private landowners, the alliance said.
Chief executive Alice Barnard said: “Fly-tipping blights our countryside, ruining the beautiful views for which Britain is rightly famous, endangering wildlife and habitats, and costing the taxpayer millions of pounds to clear up.
“The coalition Government promised to end this scourge when they published the waste review this summer.
“This is a promising start. However, they need to work closer with cash-strapped local authorities to tackle this blight.
“By raising the landfill tax in the Budget and with more cuts coming to council budgets, this problem is only going to get worse.”
The research also showed that local authorities and the Environment Agency carried out 386,010 enforcement actions, including handing out on-the-spot fines, but there were just 11,972 prosecutions.
Ms Barnard said: “Fly-tipping is a crime that perpetrators can get away with.
“We need a co-ordinated plan which ensures that people who fly-tip are caught and punished, and provides greater support to local authorities and landowners who bear the brunt of the cost of clearing up the mess.”
The Countryside Alliance wants all incidents of fly-tipping investigated and not abandoned because it might be too time-consuming or costly, and an education campaign to make householders aware they must dispose of waste through licensed companies or bodies.
The group also called for the extra money being raised from rising landfill taxes to be ring-fenced to help local authorities fight fly-tipping.