Eden District Council in Cumbria said it was supporting calls for the government to end the funding inequality between urban and rural areas.
Ministers should recognise the true costs of delivering council services in rural areas, said Eden District Council leader Gordon Nicolson.
"As the most sparsely populated district in the country we have lost more than any other council from the unfair way that government calculates its local authority grants, which currently favour urban areas over their rural counterparts," he said.
"It is basic common sense that its costs more to deliver services in a rural area, for example a rural refuse collection service takes considerably longer than a collection around a town centre.
The government's grant formula for England was weighted more in favour of density of population and urban deprivation rather than sparsity, said Mr Nicolson.
For the first time, the government had acknowledged the costs of sparsity in 2013, but then introduced a damping system which took away most of the additional grant that would have gone to rural areas.
"This helps to explain why average Council Tax in rural areas is 15% higher than across England as a whole," Mr Nicolson said.
Eden District Council is an active member of the Rural Services Network and SPARSE, which are campaigning for a fairer financial settlement from national government.
Kevin Beaty, the local authority's resources portfolio holder, said: "By making a strong evidenced backed case SPARSE has put rural funding on the government's agenda."
The government had taken some steps to address the unfair treatment of rural areas, said Mr Beaty. But there was still a long way to go.
"We are calling on the government to honour its commitment to all rural authorities and the 20% of the national population who live in these areas.
"The grant system must fully reflect the cost of delivering services in rural areas so rural council tax payers no longer pay higher council tax than their urban counterparts for fewer services."
The government should honour its commitment to all rural authorities and provide extra funding directly to rural authorities, which had been starved of resources for the past decade and more.