Households should be made to pay extra to get rid of their non-recyclable rubbish, the Government was urged yesterday.
The call from a leading think-tank came as it emerged that 500,000 wheelie bins have already been fitted with secret electronic chips which would allow individual homes to be billed for the amount of rubbish they produce.
Any move to introduce direct charging for rubbish collection is likely to prove hugely controversial.
The call for charges, from centre-left think-tank the Institute for Public Policy Research (IPPR), came as it published figures showing that the UK had the third worst recycling rates in the European Union after Greece and Portugal.
Earlier this month it was revealed that the Government was considering plans to charge households by the kilo for the amount of non-recyclable waste they leave out.
The move, which could see families in Birmingham paying charges of up to #25 a month, was criticised by Tory frontbench spokesman on communities and local government Caroline Spelman (Con Meriden), as "yet another stealth tax".
IPPR director Nick Pearce said: "Our European neighbours have shown that where charges are common place, recycling rates will rise."
He acknowledged that the rubbish collection element would have to be removed from the council tax were rubbish collection charges to be introduced.
The Local Government Association backed the call, warning that council tax bills will have to rise to pay hefty EU fines if there was no improvement in recycling rates.
Councils faced fines of up to #150 per tonne of rubbish if they fail to meet recycling targets under the EU landfill directive, with the total bill running to up to #230 million, the LGA said.
LGA chairman Sandy Bruce Lockhart said: "For decades people have been used to being able to throw their rubbish away without worrying about the consequences. Those days are now over. There needs to be a radical overhaul of the way in which rubbish is thrown away otherwise there is a real danger that council tax bills will have to rise and the environment will continue to suffer."
The revelation that up to 500,000 bins in council districts across England have already been fitted with electronic chips was made by a Sunday newspaper.
The tiny devices identify each bin so that records can be kept on the waste disposal habits of its owners.
The devices carry a unique serial number which can be scanned when the bin is tipped into a refuse lorry.
They use Radio Frequency Identification (RFID) technology which has also been used to identify animals, vehicles and expensive goods.
Some lorries carry weighing equipment which detect how much rubbish is collected and link the information to the appropriate bin.
The move raised fears that some local authorities may be planning to charge residents for the weight of rubbish they collect, the newspaper said.
The newspaper said areas where the devices were in use included Crewe, Nantwich, Peterborough, South Norfolk, Woking and Devizes, in Wiltshire.
Council representatives said the tags would help collect information about waste disposal and also settle ownership disputes over bins.
The tags, which are about the size of a one penny coin, contain a small silicon chip encased in durable plastic.
They were said to cost about #2 each, although the weighing equipment was reported to cost up to #15,000 to fit to each vehicle.
Meanwhile, the IPPR said that a "pay as you throw" system was the only way of improving Britain's poor record of waste recycling.
It said Britain recycled or composted just 18 per cent of its municipal waste in 2003-04.
That was better than Greece with eight per cent and Portugal with three per cent, but still significantly short of the next worse nation, France with 28 per cent.
In contrast, the Netherlands achieved the best results with 65 per cent.