Two thirds of local authorities said they were are unable to carry out necessary repairs to bring roads back to the condition they were in at the start of last winter.
This has left a fifth per cent of the country’s roads in need or urgent repair within the next five years, which will cost an estimated £10 billion.
The repairs have been hampered by cuts to local authority budgets which have left councils in England and Wales with an £800million funding gap.
The Asphalt Industry Alliance, which conducted the survey, said the additional Government funding of £200 million to help councils, although welcome, "has proven woefully inadequate".
Earlier this week all-party Public Accounts Committee warned that cuts to the highway maintenance budget could end up costing the taxpayer more as roads deteriorate.
It estimated that the Highways Agency alone, which is responsible for only 10 per cent of the roads network, had to pay £2.5 million compensation in a year for vehicle damage and personal injuries.
According to the Alliance, which represents companies who repair and resurface roads, said councils filled in 1.7million potholes last year.
The alliance estimated that the cold winter of 2010-11 caused £600 million damage to the country’s roads.
Edmund King, the President of the AA, said: "Our members are very concerned at this pothole plague. This deterioration [is happening] is despite councils working hard to keep pace to reduce the backlog using the extra cash allocated by the Department for Transport.
“The survey once again shows that potholes blight our roads and are as much about lack of investment in proper road repairs as they are about bad winters and heavy traffic.
“We need a new approach to stop this vicious circle of decline which causes danger to all road users, particularly those on two wheels, and expensive damage to vehicles.”
Peter Box, chairman of the Local Government Association’s Economy ad Transport Board, accused the Coalition of failing to provide enough money to tackle the problem.
“Councils are currently stuck in the position of chasing their tails, repeatedly patching up a deteriorating network rather then fixing it properly,” he said.
“What is needed from central government is a serious commitment to funding an upgrade of the entire road network. This will save billions of pounds in the long term and make roads safer for motorists.”
Norman Baker, the local transport minister, defended the Government’s record.
“I recognise there is an ongoing need for highways maintenance that can’t be fixed overnight,,” he said.
“However we are providing £3 billion to councils for road maintenance between 2011 and 2015 which is more in cash terms than the previous 4 years - as well as investing £6m for longer term strategies. We also gave them generous windfall handouts last year following the severe winter which caused major problems.”