The youngsters are among almost 5,000 residents who in some cases are being offered £500 rewards if they provide evidence of minor infractions.
One in six councils contacted by the Telegraph said they had signed up teams of "environment volunteers" who are being encouraged to photograph or video neighbours guilty of dog fouling, littering or "bin crimes".
The "covert human intelligence sources", as some local authorities describe them, are also being asked to pass on the names of neighbours they believe to be responsible, or take down their number-plates.
Ealing Council in West London said: "There are hundreds of Junior Streetwatchers, aged 8-10 years old, who are trained to identify and report enviro-crime issues such as graffiti and fly-tipping."
Harlow Council in Essex said: "We currently have 25 Street Scene Champions who work with the council. They are all aged between 11 to 14. They are encouraged to report the aftermath of enviro-crimes such as vandalism to bus shelters, graffiti, abandoned vehicles, fly-tipping etc. They do this via telephone or email direct to the council."
Other local authorities recruit adult volunteers through advertisements in local newspapers, with at least 4,841 people already patrolling the streets in their spare time.
Some are assigned James Bond-style code numbers, which they use instead of their real names when they ring a special informer's hotline.
This escalation in Britain's growing surveillance state follows an outcry about the way councils are using powers originally designed to combat terrorism and organised crime to spy on residents. In one case, a family was followed by council staff for almost three weeks after being wrongly accused of breaking rules on school catchment areas.
It also emerged last month that around 1,400 security guards, car park attendants and town hall staff have been given police-style powers including the right to issue on-the-spot fines for littering, cycling on the pavement and other offences.
Matthew Sinclair, of the TaxPayers' Alliance, described the recruitment of children as "downright sinister".
He said: "We are deeply troubled by these developments – they are straight out of the Stasi copybook. There is a combination of ever-stricter rules and ever more Draconian attempts to control people.
"Councils are using anti-terrorist legislation for the tiniest of things, like the people who put out their bins early, and the threats of fines and prosecutions combine to constitute fleecing the people the councils are meant to be serving."
The increase in surveillance comes at a time when an estimated 169 councils have dropped weekly rubbish collections.
Some local authorities are refusing to collect bins which are placed too far from the kerb, while others are issuing £100 fines to people who fail to comply with recycling rules.
Critics have claimed that councils have stopped prosecuting people for flytipping in favour of pursuing easy targets such as fining people for dropping bits of food and cigarette butts.
In April, Hull council officials fined a young mother £75 for dropping a piece of sausage roll while trying to feed her four-year-old daughter. Sarah Davies, 20, refused to pay and the matter when to magistrates court where it was dismissed.
Doretta Cocks, founder of the Campaign for Weekly Waste Collection, said the use of children by councils was "shocking".
She said: "What sort of world are we bringing them up in? I think it's dreadful for neighbour to spy upon neighbour in that way."
The Daily Telegraph contacted more than 240 councils across England and Wales to ask if they had recruited environmental volunteers.
Of those, 36 or just under one in six, said they had. They included Luton, with 600 volunteers, the highest of any council; Southwark, south London (400) Birmingham (370) Blaenau Gwent (300) and Congleton in Cheshire (300).
Among the "environmental crimes" which the snoopers are asked to report, which vary from council to council, are failure to recycle rubbish, vandalism, graffiti, dog fouling, fly-tipping and abandoned vehicles.
Some councils merely ask recruits to keep an eye out for problems, while others are sent out on patrols. Several of the councils which do not yet use volunteers said they were considering doing so in future.
Many of the town halls said they did not encourage their volunteers to confront offenders or collect evidence, for their own safety.
But Bromley Council in Kent offers up to £500 for information that leads to a conviction.
Crawley Borough Council in West Sussex said its 150 Streetcare Champions were asked to "report on individuals if known". Bolton Council said its Green Inspectors must "note any relevant information such as registration numbers" if they see criminal activity.
Others, including Fareham in Hampshire and Waltham Forest in east London encourage their volunteers to take photographs of rubbish to help investigations.
Liz Henthorn, 66, a retired nurse who is one of 120 "Street Hawk" volunteers in Enfield, north London, openly describes herself as a "curtain twitcher" but insists she is not snooping on anyone.
She said: "If there is a problem with fly-tipping, general bad behaviour, graffiti etcetera then I ring the Street Hawk person and when I do it is cleared. Enfield has become a lot cleaner because of us curtain twitchers having a look around.
"If you can you report an individual but nobody is going to give their name and address. If you know where that person lives you can say you know who it is but other than that you don't."
A spokesman for the Local Government Association, which represents town halls across the country, insisted: "Environment volunteers are people who care passionately about their local area and want to protect it from vandals, graffitists and fly tippers.
"These residents are not snoopers. They will help councils cut crime and make places cleaner, greener and safer."
Dominic Grieve, the shadow home secretary, said: “In any civilised society the community will engage with the police but it would be plain wrong for young children to be recruited and trained for reward. People want to see the police and other appropriate agencies on our streets catching and deterring offenders.”
Councillor Sue Emment, Ealing Council’s cabinet member for environment and street services, said: “Ealing Council works with participating schools so Junior Streetwatchers can learn how to help our local environment, take pride in their community and have a sense of civic responsibility.
“Organisations like the TaxPayers’ Alliance are fast becoming parodies of themselves and ought to find out about Council schemes before making comments. We feel it is sad that the valuable time these young people are spending on improving the community should be criticised in any way.”
A spokesman for Harlow Council said: “We need to encourage more people to care for their community. If we can encourage people at a young age to do this then they will grow up to respect the environment. Our Street Champions, which is an entirely voluntary scheme naturally, has the backing and support of parents for children to take part in the scheme. The scheme is highly regarded.
take part in
in a wider