Fortnightly rubbish collections are not right for all areas and there is no proof they increase recycling, MPs say.
Ministers want more household rubbish to be recycled
The Commons local government committee called plans for recycling rewards and charges of as little as £20 "timid" and warned they may encourage fly-tipping.
It said fortnightly collections were not appropriate for inner cities and more research was needed into health risks of leaving rubbish in the street.
The Department for the Environment said it was "disappointed" with the report.
The MPs' report follows criticism of "alternate week collections", adopted by 140 councils in England, which see recycling taken one week, and other household waste collected the next.
The aim is to reduce the amount of waste going into landfill sites - part of the government's commitment to meet EU targets.
But critics say kitchen waste is left to rot for up to a fortnight and encourages vermin such as rats and flies to flourish.
In its report, the committee said: "Research has found no public health risk, but wider research is required to convince the public."
Some councils had "blundered into" introducing alternate weekly collections "without adequately informing local householders and council tax payers".
And although areas which had introduced the system had seen a boost in recycling, there was no proof of a "direct causal link" as it was "always part of a package of measures" to encourage recycling.
The report added: "Alternative week collections are clearly not appropriate to all areas, particularly highly urban areas characterised by much shared accommodation.
"Whether a weekly or alternate system is best for a particular area is a matter of local circumstance and a matter for local choice."
The EU Landfill Directive requires a 25% reduction on 1995 levels by 2010, and a 65% cut by 2020.
David Miliband said the UK was lagging behind Europe on waste
But the MPs said, rather than imposing direct charges for bin collections - as used in most of Europe - the government had recommended that councils give cash rewards for those that recycle, and fines for those who do not.
"Breaking the link with council tax and establishing refuse collection as a utility, like gas or sewerage, might have the radical impact the government say they want," the report said.
"The half-hearted tilt in the direction of charging contained in their current proposals will not."
It also said evidence from other countries suggested introducing charges led to a rise in fly-tipping and said, despite promises the scheme would be "revenue neutral" - they would be seen as an additional charge.
MPs suggested ending the use of the term "alternate weekly collection", which was "bureaucratic and confusing", and urging councils to look for "straightforward descriptions of their own local arrangements".
Giving evidence to the MPs, former environment secretary David Miliband said the UK was "lagging far behind much of Europe" on waste.
The Department for the Environment said it was "disappointed that on financial incentives, the committee has not recognised the need to try out new and innovative ways of encouraging sustainable waste behaviour".
It said the "financial incentives proposal" was still being consulted on and was not finalised, but added: "It's clear that we cannot go on throwing ever increasing amounts of rubbish into landfill.
It said the committee had "misunderstood" its proposals, adding: "We have not fixed a level for the incentive - this would be up to authorities to decide."
Shadow local government secretary Eric Pickles said: "Bin taxes would damage the local environment and public health by leading to a surge in fly-tipping and backyard burning and the poorest households would be hit the hardest by this highly regressive new tax."