Research conducted for the Association of London Chief Education Officers discloses that the number of pupils in the capital with statements of special needs significantly exceeds national expectations.
And it claims that, on average, more than 12 per cent of local authorities' budgets for school-aged children is being spent on special needs.
The survey comes amid a massive increase in the number of parents who are challenging local authority decisions about their children's special needs,which in turn is hitting already stretched budgets.
Coopers and Lybrand, the management consultants, have also warned that the number of children needing special help is threatening to overwhelm national education budgets. They claim the increase in claims for educational support is "an expenditure time-bomb".
The survey for the ALCEO reported increases in spending on special needs across 17 London authorities of between 3.3 per cent and 51 per cent.
In all authorities the total number of pupils with statements of special needs exceeded significant ly expected levels predicted by Baroness Warnock, the former mistress of Girton College, Cambridge.
Her committee, whose recommendations led to the 1981 Education Act and the current special needs framework, claimed that 2 per cent of pupils would require help, although it also said that one in five would require some form of special education provision at some time during their school career.
The ALCEO study found that across the capital, on average, 2.9 per cent of children had special needs. The highest percentage was 5.6 per cent. On average, local authorities said the proportion of children with statements of special needs had increased by 49 per cent during the past three years.
One authority claimed the number of children with statements in its schools had risen by 195 per cent, another reported a 160 per cent increase.
The survey discloses that the largest group of pupils with statements of special needs were those with moderate or special learning difficulties investigation.
Glenys Andrews, education director of Hillingdon who conducted the survey,says LEAs must ask themselves how far the current trend of increasing numbers of pupils with statements of special needs is acceptable.
They also need to consider the definition of exceptional needs that are required for statements.
She says that councils might want to question whether increases in the number of children with moderate or specific learning difficulties actually reflect highly exceptional needs or are the effects of parental expectations.
Her study, which calls for some form of benchmarking in special education funding, has been passed to the Department for Education and Employment,
A report to be published next month by the Associations of Metropolitan Authorities and County Councils is expected to reveal that the number of parental appeals increased from an average of 22 a year to 114 last year.
About half of the complaints by parents to the special educational needs tribunals were successful.
One authority claimed that the amount of money it was spending on appeals had increased by #163;150,000 in 1994 when the tribunal was introduced and #163;50,000 the next year.
Chris Waterman, education officer at the Association of London Government,said: "The policies have led to a full realisation of local authorities' fears.
"The people who were experienced in dealing with children with special needs always knew the code of practice could not be introduced without additional funding."