A third of town hall chiefs walk away with a golden goodbye worth hundreds of thousands of pounds, according to a survey by the local government spending watchdog.
The Audit Commission found some council chief executives had received severance payments of more than £500,000. Since 2007, 37 have been paid £9.5 million in total.
The watchdog called for much greater transparency about the deals, saying many were unjustified.
Competent chief executives were being shown the door needlessly, often because of a personality clash with elected leaders, while those who were not up to the job were being paid off when they should simply be fired.
The Audit Commission demanded that:
:: Paid-off chief executives who quickly find a job elsewhere to be required to hand back at least some of the cash;
:: Consideration to be given to advance "pre-nuptial" agreements setting out the specific grounds and terms for severance of contract;
:: All severance deals to be reviewed by council scrutiny or remuneration committees, with details published shortly after they are agreed;
:: Formal appraisal processes for chief executives to prevent pay-offs for poor leaders.
Communities and Local Government Secretary John Denham backed the recommendations and wrote to Margaret Eaton, chair of the Local Government Association, urging their rapid adoption.
"The Audit Commission report shows that too many chief executives are being dismissed because they have fallen out with council leaders - this can cost as much as £500,000 in some cases and is all too often seen as a quick-fix solution," he said.
"Taxpayers' money should not be used to resolve personal differences.
"It is time we find a way to change the rules so taxpayers' money can be clawed back where the system has been exploited.
"Councils should also make publicly available what they waste in pay-offs and set up remuneration committees to decide appropriate pay awards and senior structures.
"Local government, like the rest of the public sector, needs to show that it can take the tough choices to make sure public money is used in a way that protects the frontline services which matter to people most."
The Audit Commission found that, of 122 departing chief executives between January 2007 and September 2009, 37 had been paid off under mutually-agreed contract terminations.
The average payment was £256,104, but 13 were worth more than £300,000 and three were of more than £500,000.
The watchdog said that the trigger for pay-offs was usually the breakdown in relations between the chief executive and the elected members.
But, it added, some were down to little more than a personality clash or incoming political leaders wanting rid of a senior officer associated with their predecessors.
Audit Commission chairman Michael O'Higgins said: "There have been a lot of assertions made on this subject, against the backdrop of concerns about public sector pay generally.
"Now the Audit Commission is laying out the facts and making recommendations aimed at protecting the public purse, as well as the rights of chief executives and council leaders."