The Local Government Association (LGA), which represents more than 370 councils in England and Wales, has issued the warning after tests on one seized stash of counterfeit vodka found dangerous quantities of cleaning products and paint solvent.
Drinking the alcohol could cause vomiting, permanent blindness and liver problems.
Thousands of counterfeit alcohol bottles, including wine and beer, have already been seized in the lead up to the biggest night out of the year, the LGA said.
The LGA is urging consumers to look out for warning signs that your New Year bottle might be a counterfeit.
These include unfamiliar brand names, crooked labels, spelling mistakes and low prices that are “too good to be true”.
Simon Blackburn, chairman of the LGA's safer and stronger communities board, said: "New Year's Eve is the biggest drinking night of the year but people need to avoid suspiciously cheap, fake alcohol at all costs because it could seriously harm your health, and even kill you.
"Counterfeit alcohol also harms legitimate traders and threatens livelihoods, with the black market trade helping to fund organised criminal gangs. Council trading standards teams have been cracking down on businesses selling fake alcohol and rogue sellers should think twice about stocking these dangerous drinks as we will always seek to prosecute irresponsible traders."
In Cheshire, a man was found with 26 litres of fake vodka unfit for human consumption, as well as 108 bottles of illicit wine.
Meanwhile, trading standards seized 800 bottles of suspected fake vodka in Crewe, and bottles of fake Glen’s Vodka were seized from an off-licence in Burton, Staffordshire.
Separately, in Lincolnshire, officers also seized an incredible 3,570 litres of mostly counterfeit beers, wines and spirits from 20 premises as part of a joint operation with police, HM Revenue and Customs and the council.
Anyone who thinks they have consumed fake alcohol should seek medical advice.
Additional reporting by PA
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