More incinerators are needed if Britain is to reduce landfill waste and avoid hefty fines, a think tank says.
The independent New Local Government Network (NLGN) says households in areas that accept incinerators should be rewarded with lower energy bills.
It also calls for financial incentives to boost recycling rather than penalty charges to cut waste.
But environment minister Joan Ruddock said the report contained "a number of inaccuracies and misconceptions".
The NLGN warns tough decisions are needed if councils are to meet EU landfill targets and avoid huge costs in taxes and fines.
It recommends building 10 large-scale incinerators and as many as 200 smaller plants using anaerobic digestion to turn organic waste into biogas.
Public resistance
Other European countries with higher recycling rates use incineration on a bigger scale to burn residual waste.
But while modern incinerators are much safer and can generate local heat and power, they frequently meet public resistance.
"It is clear that the Government has to adopt a new approach to this challenge"
The NLGN suggests using £50 discounts on fuel bills for households in areas that give incinerators the go-ahead.
It also criticises "pay-as-you-throw" bin charges as unpopular and difficult to administer, though pilot schemes in five council areas are still planned for next year.
The think tank instead suggests community incentives such as grants to improve street lighting or children's equipment for parks.
NLGN director Chris Leslie said: "By offering local communities financial incentives, residents would be able to benefit their locality as well as the wider environment.
Financial incentives
"With landfill tax increasing year on year and some authorities spending millions of pounds dealing with the problem of rubbish disposal, it is clear that the government has to adopt a new approach to this challenge."
Ms Ruddock said the government already backed financial rewards to encourage recycling.
"It is our intention to allow five pilot schemes to incentivise recycling by giving rebates to those who recycle and only charging those who refuse to do so," she said.
Meanwhile, anaerobic digestion was the government's preferred form of gaining energy from waste and grants were in place to boost its development.
Paul Bettison, of the Local Government Association, said: "Financial incentive schemes should be exactly what they say on the tin.
"Any council that looks to introduce these measures will do so to promote recycling and reward local people who do their bit for the environment. No resident need lose out provided they are prepared to recycle."
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