Mr Osborne says the government is too negative on green issues
People who recycle household waste would get up to £130 a year in shopping vouchers under the Tories, shadow chancellor George Osborne has said.
He said a Conservative government would reward people who recycled, not "punish them" with "bin taxes".
Other green pledges outlined include a 10% cut in Whitehall carbon emissions in the Tories' first year in power.
Minister Ed Miliband said Labour was cutting Whitehall emissions and the Tories had "no plan" to make it happen.
The UK must reduce the amount of waste sent to landfill by nearly two-thirds by 2020 to meet EU targets.
Since March Conservative-controlled Windsor and Maidenhead Council has been working with a US company which specialises in "pay to recycle" schemes in America - funded by savings in landfill tax.
The Tories say it has encouraged households to boost their recycling by 30% and the average home is on course to receive £130 a year in vouchers.
Points earned through recycling are redeemed online and spent in local shops, including Marks and Spencer.
Rolling out the scheme was one of several environmental pledges outlined by Mr Osborne in a speech at Imperial College London.
"At the moment it's all about pain not gain. If you don't recycle enough, Labour ministers say: 'We will punish you with bin taxes' but we all know that carrots work better than sticks," he said.
"So I say reward people who do recycle with £130 a year on average for every family that does their bit."
'Real time' consumption
Mr Osborne also pledged to cut carbon emissions from government departments by 10% in the first year of a Conservative administration - which he said would save £300m each year.
He said the party was "deadly serious" about the target and was prepared to use the "clout of the Treasury" to ensure departments met it - by telling them they will be given less money to spend on energy bills.
He said that the Conservatives would publish online, in "real time", the energy consumption of all Whitehall departments.
Householders would be rewarded for recycling under the scheme
And every home would be offered a "smart meter" - allowing them to compare how much energy they were using with similar properties.
Other plans include setting up a "green investment bank" to help get private money to finance new green technology companies and introducing "green ISAs" allowing people to save money in tax-free accounts that will be used to invest in green companies.
Mr Osborne accused Alistair Darling of being "at best indifferent, at worst obstructive" on environmental issues.
But Energy and Climate Change Secretary Ed Miliband told the BBC: "George Osborne wants to convince you that you can have essentially a free lunch, that he can cut the deficit, cut public spending and he can also cut carbon emissions.
"But the truth is, what we've just heard from him, he doesn't have a clue how he's going to do it."
The government was already cutting carbon emissions from the Whitehall departments, which he said were down 16% on 1999 levels, by 2010 he said.
"To get these kind of reductions in emissions you need some upfront investment - it's like lagging your loft or putting in a new heating system - but he wants to cut public spending."
Lib Dem energy spokesman Simon Hughes said Mr Osborne had not voted for a Lib Dem motion last month to cut Whitehall's carbon emissions by 10% adding: "It's a pity the Tories' deeds so often fail to match their words."
Mike Webster, a spokesman for the charity Waste Watch, had some concerns about rewarding people for recycling.
He told the BBC: "Although the scheme will encourage people to recycle more, it does not actually encourage them to produce less waste. You could even say that it is encouraging people to produce waste by paying them."
But Mike Childs from Friends of the Earth welcomed Mr Osborne's pledge to put the Treasury at the forefront of green policies and for a green investment bank adding: "He rightly recognises that emissions trading isn't working and that other policy tools are needed to tackle climate change."