There were nearly 43,000 hospital operations to remove teeth in children and teenagers last year - equating to 170 a day, the latest figures show.
The Local Government Association (LGA) said the alarming figures - up by nearly a fifth in the past four years - are likely to reflect young people's excessive consumption of sugary food and drink, as well as poor oral hygiene.
Its analysis of NHS spending data shows there were 42,911 extractions of multiple teeth in under-18s in England in 2016/17 at a cost of £36.2 million.
This amounts to a 17% increase on the 36,833 in 2012/13, with the total cost to the NHS for these operations since 2012 reaching £165 million.
Tooth extraction has to be carried out in a hospital rather than at a dentist when the severity of the tooth decay means that it has to be undertaken under general anaesthetic.
The LGA, which represents 370 councils in England and Wales, said further action is needed to tackle the amount of sugar that is being consumed and has long called for measures such as reducing the amount in soft drinks and introducing teaspoon labelling on food packaging.
It is also calling for councils to have a say in deciding where the revenue from the soft drinks levy, which will create an additional charge for drinks manufacturers whose products exceed around 5% sugar content when it is introduced in April, is spent.
Councillor Izzi Seccombe, chairwoman of the LGA's Community Wellbeing Board, said: "These figures, which have risen sharply, show that we have an oral health crisis and highlight the damage that excessive sugar intake is doing to young people's teeth.
"The fact that, due to the severity of the decay, 170 operations a day to remove teeth in children and teenagers have to be done in a hospital is alarming and also adds to current pressures on the NHS.
"This concerning trend shows there is an urgent need to introduce measures to curb our sugar addiction which is causing children's teeth to rot.
"Untreated dental care remains one of the most prevalent diseases affecting children and young people's ability to speak, eat, play and socialise.
"These figures also highlight how regular check-ups at a dentist can help prevent tooth decay and the need for hospital treatment."
The British Dental Association (BDA) condemned health ministers over the figures and said England is receiving a second-class service as, unlike Wales and Scotland, it has no dedicated national child oral health programme.
Chairman Mick Armstrong said: "These statistics are a badge of dishonour for health ministers, who have failed to confront a wholly preventable disease.
"Tooth decay is the number one reason for child hospital admissions, but communities across England have been left hamstrung without resources or leadership.
"This short-sightedness means just a few thousand children stand to benefit from policies that need to be reaching millions."
Professor Russell Viner, officer for health promotion at the Royal College of Paediatrics and Child Health, said: "Having a tooth extracted is very serious.
"There's the operation itself to consider, the aesthetic along with its associated risks as well as the anxiety operations cause children and their families.
"As many of these operations are due to the food and drink children consume, they are completely preventable and pose an unnecessary financial burden on our overstretched NHS.
"At a time when we are faced with reports of chronic bed shortages and cancelled operations, these latest startling statistics should act as a wake-up call to policy makers and act as the catalyst for change."
An NHS England spokeswoman said: "NHS dental care for children is free, and tooth decay is preventable, but eating sugary food and drinks is driving this unfortunate and unnecessary epidemic of extractions.
"NHS England is working with the dental profession, local authorities and health providers and has developed Starting Well - a campaign targeted at high-need communities to help children under five see their dentist earlier and improve their dental health."