Bookmakers who rake in more than £2bn from betting on greyhound racing should contribute 1p in every pound to pay for the animals' welfare, Labour delegates are being told.
The League believes the levy could bring in £20m a year
The League Against Cruel Sports says for every 10,000 greyhounds that retire each year, only 2,000 are known to be rehomed, while the rest disappear or are put down.
The group believes a "tax" on bookies' turnover could help fund a promotional campaign to encourage more people to adopt the dogs as pets.
It is now calling for the government to include the protection of greyhounds in its forthcoming Animal Welfare Bill, believed to be going through Parliament in the next 18 months.
One Foot in the Grave actress Annette Crosbie helped launch the campaign to Labour delegates on Monday during a fringe meeting at their annual party conference in Bournemouth.
Mike Hobday, the League's head of public relations, told BBC News Online: "The bookmaking industry takes in £2bn a year on greyhound racing and a tiny amount of money is returned to be spent on greyhound welfare.
"We are calling for 1p in the pound of bookmakers' income to be spent on greyhound welfare.
"Ten thousand dogs leave the racing industry every year and only 2,000 of those are known to be rehomed and the industry takes no responsibility for what happens to them.
"The other eight thousand simply disappear. There are no statistics for what happens to them - they are simply a forgotten problem.
"These are dogs that can easily be rehomed. They are excellent pets," said Mr Hobday.
"I think far too many of them are put down and because greyhounds are identified by a tattoo in their ear, there have been cases of a body found with the ear cut off to prevent the identity of the owners being discovered.
"If money was put into a promotional campaign for people to consider adopting greyhounds, far more would live long and very happy lives."
Racing greyhounds can be considered past their prime at the age of three or four, but many will live for more than 10 years.
The League also believes the levy, which it is estimated could bring in £20m a year, could pay for vets to be employed at all greyhound tracks to deal with any injured animals.
Mr Hobday said while the League did not believe dog racing was inherently cruel, "greyhounds are made to suffer for the sake of the industry before, during and after their racing careers".
"Greyhound racing is entirely self-regulating. While there are people who profess a great concern about the dogs' welfare, they have simply proven themselves unable to address the problems that greyhounds are suffering," he said.
"We believe these problems can be addressed by appropriate government legislation and primarily, by making sure the bookmakers pay a fair rate on the money they get in."