Councils should be given powers to charge households for getting rid of non-recyclable rubbish, a think tank has urged the government.
The UK has one of the worst recycling records in the EU
The Institute for Public Policy Research said a "pay as you throw" system was the only way to improve the UK's poor recycling record.
The UK recycled or composted only 18% of waste in 2003-04, IPPR figures show.
Meanwhile, the Mail on Sunday reports 500,000 bins in England have been given "bugs" to record homes' waste habits.
The newspaper says the devices carry a unique serial number which can be scanned when the bin is tipped into a refuse lorry and that some lorries carry weighing equipment.
It has raised suspicions some local authorities are planning to charge residents for the weight of rubbish collected, the paper says.
The IPPR says the UK has one of the worst recycling rates in Europe, with only Greece and Portugal doing worse.
The "pay as you throw" system is also backed by the Local Government Association (LGA) which has warned that council tax bills will have to rise if councils have to pay big EU fines because of poor recycling rates.
ENGLAND'S TOP FIVE RECYCLING COUNCILS
St Edmundsbury: 50.64%
Forest Heath: 48.59%
South Cambs: 46.80%
The LGA said councils faced fines of up to £150 per tonne of rubbish if they failed to meet targets under the EU landfill directive.
IPPR director Nick Pearce said that for the new system to be fair, rubbish collection would have to be removed from the council tax.
"The government should give local authorities powers to charge for collecting non-recyclable waste," he said.
"Our European neighbours have shown that where charges are commonplace, recycling rates will rise."
The IPPR figures showed big differences between the recycling rates of local authorities in England.
ENGLAND'S BOTTOM FIVE RECYCLING COUNCILS
Tower Hamlets: 7.35%
High Peak: 9.82%
St Edmundsbury, in West Suffolk, fared best, recycling 50.64% of its waste. Newham, in London, fared worst, recycling only 6.23% of waste.
LGA chairman Sandy Bruce Lockhart called for a "radical overhaul" to stop council tax rises and help the environment.
"For decades people have been used to being able to throw their rubbish away without worrying about the consequences. Those days are now over," he said.
Julie Hill, of the Green Alliance, said it would be a positive step to charge people for the amount of non-recyclable waste they produced, and the amount would not be punitive.
"We see it completely the other way around, it's a positive signal," she told BBC Radio Five Live.
WASTE RECYCLED IN EU
"The proposition is that the fee for waste disposal would come out of council tax and instead you would pay for the waste that's left over from your recycling, so the more you manage to recycle, the less you'd pay."
She said that studies in other countries had shown that it could have net benefits to householders.
"So I think that's a much more rewarding way of going about it than say, for instance, compulsory recycling and the threat of penalties."
Paul Bettison, chairman of the Local Government Association's environmental board, said that drastic action of some sort was needed.
"We've got to deal with the thing as a complete problem, and it really is a problem, because the holes in the ground into which we've been throwing our waste for years are full, and we either reduce the amount that we put into them, or we seriously consider building hills," he told Five Live.
The Mail on Sunday report said the installed bugs transmitted information about contents of bins to a central database which recorded the waste disposal habits of individual addresses.
Council officials say they have been installed to improve efficiency and settle disputes between neighbours over who owns the wheelie bins, the paper said.