Overweight benefit claimants could have their money docked if they refuse exercise regimes prescribed by doctors under pioneering council plans.
Smart cards would be brought in to monitor the use of leisure centres meaning local authorities could reduce welfare payments for those who fail to follow their GP's advice.
The introduction of the Oyster-style cards is one of a number of "radical" proposals designed to tackle rising levels of obesity set out in a report by Westminster council and a local government thinktank.
It comes as local authorities prepare to take on responsibility for public health services as part of a major overhaul to be launched in April.
Several councils have already introduced schemes that allow doctors to prescribe exercise at local facilities including swimming pools, gyms, yoga and walking clubs.
A spokesman for Westminster said the Conservative-run council would operate a carrot and stick approach and offer financial rewards when overweight claimants made an effort to comply with prescribed activity routines.
Its report, A Dose of Localism: The Role of Councils in Public Health, states: "Relocalisation of council tax benefit and housing benefit combined with new technologies provide an opportunity for councils to embed financial incentives for behaviours that promote public health.
"The increasing use of smart cards for access to leisure facilities, for instance, provides councils with a significant amount of data on usage patterns.
"Where an exercise package is prescribed to a resident, housing and council tax benefit payments could be varied to reward or incentivise residents."
Westminster council hopes its proposals, compiled in conjunction with the Local Government Information Unit, will lead to savings across the community as Britain's population ages and becomes increasingly overweight.
This is expected to lead to a rise in cases of dementia, diabetes and heart disease which already impose an enormous financial burden on the NHS.
Philippa Roe, leader of Westminster council, said: "Councils have a great opportunity to improve lives by thinking how public health can be integrated into existing local services. This can lead to savings being shared across the entire public sector.
"This report contains exactly the sort of bright, forward-thinking and radical ideas that need to be looked at. Local government needs to seriously start considering how it is going to manage public health before April arrives - it is only four months away.
"The potential improvements to the nation's health and to the public purse could be significant."
The plans were announced as it was disclosed that people in England do not know what their diet contains and are surprised by the level of "hidden nasties" in their favourite foods.
The survey, backed by the Department of Health's Change4Life campaign, found many respondents did not realise how much salt, sugar and saturated fats are contained in the food they eat every day.