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Kent County Council could take over the running of mental health services for children within six months amid concerns the NHS body that runs them has not provided value for money.
The council pays £2.65m per year to North East London NHS Foundation Trust (NELFT) to deliver these services but not enough young people are getting treatment.
NELFT could lose its control of the contract due to a dispute over pay and change in management.
The service includes emotional well-being interventions like cognitive behavioural therapy and counselling for children struggling with their mental health.
Treatment for children and young people who have been victims of sexual abuse is also provided to ensure their education and health is not affected.
Pupils who are unable to attend school due to mental health also receive treatment to help them to potentially return.
However the council is now looking to end its section 76 agreement with the NHS, claiming the provider is not up to scratch.
The law states a local authority "must be satisfied the payment is likely to secure a more effective use of public funds" before making a payment under section 76 of the National Health Service Act.
Director of early help services, Stuart Collins, told the children, young people and education cabinet committee how KCC will be monitoring the situation for six months.
He said: "The performance has been improving but it has been very difficult to evidence the value for money and with the current management arrangements we have not been able to do that.
"This is why we propose to bring it under the management of the local authority but within the current contract arrangements with the current provider for six months.
"We would need to demonstrate sustained improvement [to continue with NELFT]. We are fully committed to work with the NHS and partners."
Brid Johnson, director of operations for Essex and Kent said: "Since commencement of the Kent contract in September 2017, NELFT has been working in partnership with both KCC and CCGs in order to set up a new service model.
"Throughout this period NELFT has been faced with an overwhelming demand for services and have had to focus on embedding a new clinical model based on evidence based practice and robust management of waiting lists.
"Throughout this period NELFT has been transparent with commissioners on the challenges but remain fully committed to continuing to work in partnership with KCC and local CCGs in order to deliver a high quality service to the children and young people of Kent."