They want inspectors to be more positive and to work with councils in raising standards.
Their criticism is the latest salvo in the runnning battle between OFSTED and local government. Next week, MPs will question chief inspector Chris Woodhead about his annual report which was published last month.
They are likely to ask tough questions about OFSTED's role in highlighting failing authorities. A number of council services have been handed over to the private sector following poor inspection reports.
However, while some councils such as Islington and Hackney in London have had to contract out services, others which also failed to impress inspectors have not.
In a submission to MPs on the education select committee, the Local Government Association says, "From reading authority inspection reports, it is unclear on what basis OFSTED forms its judgments: the text for two differnt authorities can be very similar, yet one will be judged in need of intervention and the other not."
The association would like to see a more thorough evaluation of reports before publication. It would like inspectors to offer advice and assistance to enable authorities to tackle weaknesses.
"There isn't a clear dividing line between a good organisation and a bad one," a spokesman said. "Pass and you're off scott free, fail and you're subject to the threat of 'externalisation'. It is often easier to criticise than make constructive suggestions. It is widely acknowledged that OFSTED is very good at the criticism."
The association also mounts a strong defence of its involvement with schools and its role as an innovator. In his annual report, Mr Woodhead attacked the "plethora of ineffective and often unwelcome initiatives", from local government. However, the association has pledged to continue to experiment and spread good practice.
An OFSTED spokesman said Mr Woodhead would answer questions at the select committee.