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In England parish councils were formed as part of the feudal system in the 11th century to oversee the welfare and civic duties of a town or village. Many parish councils are still in place today, particularly in rural communities.
A distinction is made between ecclesiastical and the civil parish councils. The former looks after the welfare of a particular religious community while a parish council tends to the needs of a particular settlement and is not linked to a church.

Parish councils have various local responsibilities. Typical activities undertaken by a parish council include allotments, parks, litter collection, maintenance of a village hall, public clocks, and entering Britain in Bloom. They also have a consultative role in planning. Parish councils are 'precepting authorities' and have the power to raise funds by levying a precept on the Council tax payed by local residents.
Parish councils are run by volunteer councillors who are elected to serve for 4 years. Different councils have different numbers of councillors.
Most parish councillors are elected to represent the entire parish. Only if there are more candidates standing for election than there are seats on the council will an election be held.
Some parishes are deemed too small to have a parish council and instead have a parish meeting; an example of direct democracy. Parishes can be grouped with other parishes and share a common parish council.
A parish council can also be called a Town Council or a City Council (but not all city or town councils are parish councils). It can become a Town Council unilaterally, simply by making a resolution to do so. City status however is granted by the crown. In England, there are currently six parishes with city status : Chichester, Ely, Hereford, Lichfield, Ripon, and Wells. The Chair of a Town council or City council will usually have the title Mayor.
Sometimes a city or town is abolished as a district, and it is considered desirable to maintain continuity of the charter until a parish council to replace it can be set up. In this case Charter Trustees perform some of the functions of a parish council, and maintain traditions such as mayoralty. An example of such a city was Hereford, whose city council was merged in 1998 to form a unitary Herefordshire. The area of the city of Hereford remained unparished until 2000 when a parish council was created for the city.
The policy of the present government is to encourage creation of town and parish councils in unparished areas. Recently established councils include those for Daventry (2003), and Folkestone (2004).
Parishes tend not to exist in metropolitan areas, but there is generally nothing to stop their establishment. For example, Birmingham has a parish, New Frankley. In Greater London, however, the current legislative framework for local government forbids the establishment of civil parishes.

Taken from:- http://en.wikipedia.org/wiki/Local_government_in_the_United_Kingdom