Prime Minister David Cameron has vocally championed the need for the UK to press ahead with exploiting the controversial energy-extraction technique in the face of escalating protests.
The Local Government Association is seeking talks with ministers over what it considers inadequate financial benefits being offered for affected areas.
In other parts of the world residents got between 5% and 10%, it pointed out, contrasting the much smaller portion on offer in the UK with tax breaks on offer to encourage energy firms to exploit shale.
Polluted water supplies and minor earthquakes are among the impacts feared by opponents of the technique as well as damage to rural areas, noise, traffic and lower house prices.
Mike Jones, who chairs the LGA's environment and housing board, said: "The Chancellor has offered shale gas firms the most generous tax breaks in the world.
"We believe that the benefits being offered to local areas need to be more substantial.
"This is something we will now be looking to discuss with government.
Asked about the call for higher compensation, a Downing Street spokesman told reporters at a Westminster briefing: "The Prime Minister's view is clear.
"He thinks that shale gas exploration has huge potential benefits for the economy in terms of job creation and so on.
"His view is that there are potential benefits to consumers in terms of lower gas bills, energy bills - but that any kind of development or exploration must follow a locally-led planning process.
"Part of that process is that where shale gas exploration does take place, the local community benefits.
"We have talked about a figure of 1%. We feel that that is a good level and could lead to real benefits for local communities where shale gas exploration takes place.
"That's what we are currently set at."
Number 10 said Mr Cameron would be happy for drilling to go ahead in his own rural Oxfordshire constituency - so long as it had been approved in a locally-led planning process.
"If locally-led planning processes were followed then yes, the Prime Minister would be happy."
The spokesman said the premier backed people's right to protest against fracking but that they must remain "within the law".
Anti-fracking protesters have blockaded the headquarters of energy firm Cuadrilla and superglued themselves to a PR company it uses on the first of two days of promised "mass civil disobedience".
Mr Jones said: "Councils are going to have to take some difficult, controversial decisions about whether or not to approve applications for shale gas developments.
"They will need to balance the need to make the most of natural resources with safeguarding the environment and protecting the public. As always the needs of local people will be at the heart of the decision making process."