Speaking to Planning, Rosemarie MacQueen, Westminster City Council’s strategic director for the built environment, said the authority had been inundated with applications from groups wanting to draw up neighbourhood plans to shape development in their area.
MacQueen said Westminster had received 12 neighbourhood forum applications with a further 10 in the pipeline.
She said: "As far as I can see, speaking to other councils, none has anything like the level of interest in setting up neighbourhood forums that we have had.
"It’s proving to be quite interesting in terms of the extra expense the council is having to go through."
MacQueen said councils were only able to bid for £5,000 per neighbourhood forum with a total cap of £20,000 per local authority.
She said: "The money that will be coming through from central government just simply isn’t enough.
"There has to be lots of investment by the city council in assisting with neighbourhood planning which we are legally required to do."
MacQueen said even if a group hired a private consultant to draw up its neighbourhood plan, the council would still have to liaise with the group and organise referendums once the plan passed examination.
She said she had had to move one of her team to work on neighbourhood planning full-time, "which I can ill-afford," she added.
"This seems to me to be a full-time job for at least a handful of planners."
MacQueen said dealing with neighbourhood planning was "an enormous piece of work" at a time of "shrinking resources" for councils.
She said a further problem was that some groups were applying to draw up competing plans for the same area, while others involved plans covering overlapping areas.
A map on Westminster City Council's website of the neighbourhood forum applications so far shows four overlaps.
MacQueen said that government guidance was insufficient for local authorities to deal with the issue.
She said: "The [Localism] act is terrible silent on how you deal with disputatious issues like this.
"If arbitration is needed, you have to show how came to a conclusion."
A spokesman for the Department for Communities and Local Government said: "It is pleasing to see neighbourhood plans being developed in Westminster.
"The government has put in place appropriate funding to cover the new burdens imposed on local authorities by neighbourhood planning under the Localism Act."
The spokesman said it us up to the local authority "to work with the community to decide, following a period of public consultation the appropriate neighbourhood area".
He said only one neighbourhood plan and forum could be produced for each designated neighbourhood area, so with competing applications, the council "must determine the most appropriate neighbourhood area".
He added that details of funding available for local authorities in 2013 would be announced "very shortly".
MacQueen said many of the neighbourhood forum applications were from Westminster’s 19 well-established amenity societies, but some were from new groups.
She said members were still considering how to respond to the many applications. One "bottom-up" option, she said, was to leave arguing parties to sort out their differences themselves before approaching the council again.