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Under the powers, included in the Climate Change Bill, a maximum of five local authorities will be granted permission to pilot the schemes.

The councils will be able to come forward with schemes to fit local circumstances but they must be approved by the Environment Secretary and follow clear guidelines set out in legislation - including having checks and balances in place for residents. Local authorities will have to pay back to residents overall any money they collect from them as part of the pilots. Those throwing away the least would receive a rebate and those throwing away the most could pay more.

The schemes will then be reviewed to ascertain their success before a decision is made on whether they can be introduced more widely.

Details of the pilots were set out by Ms Ruddock in a written Parliamentary statement made last week. The relevant clauses are included in the Climate Change Bill.

Ms Ruddock said:
"The case for reducing the amount of waste we all produce is clear - it is damaging the environment and contributing to climate change. Furthermore it makes no financial sense to keep dumping it into holes in the ground.

"We need to work out the best way to achieve this. Local authorities have asked for incentive schemes as one of their options. Indeed, responses to the Government's consultation showed strong support for these powers from within a wide range of local authorities across the whole political spectrum.

"But we realise that, while such schemes are common overseas, this is new ground for this country and that is why we want to pilot them first - to ensure the right checks and balances are in place for residents who participate.

"This is a new power for England. We therefore want to give a number of councils the chance to pilot incentive schemes to help monitor impacts and learn valuable lessons."

The announcement follows a 12 week consultation on the incentive schemes and confirmation in the recent Climate Change Bill Command Paper that the Government proposes to pilot the schemes.

Defra has committed up to £1.5 million per year over three years to help support the pilots. Ms Ruddock confirmed that under the pilots rebates could be deducted from council tax payments.

The checks and balances that will back up the schemes include:

• A requirement that local authorities provide good kerbside recycling services so that residents have ample opportunity to recycle.
• A requirement that local authorities take account of the needs of any potentially disadvantaged groups when piloting the schemes.
• A requirement to have a fly-tipping prevention strategy in place. While evidence from overseas does not point to an automatic increase in fly-tipping, prevention strategies are a sensible precaution.

What happens elsewhere?
Experience from other countries does show that similar incentivising schemes boost recycling and reduce waste overall - cutting the cost of waste disposal to householders and councils.

In 11 of the EU 15 countries householders pay according to how much waste they throw away and the evidence shows that this has led to higher levels of recycling and less waste being generated in the first place.
For example:

• In Maastricht, Netherlands, householders buy special sacks to dispose of their waste. Recycling has risen by 15 percentage points and the municipality's overall waste bill fell by 20%.
• In Treviso, Italy, householders pay according to how often their non-recycled waste is collected. The scheme has helped achieve a 12% reduction in waste levels.
• In Bjuv, Sweden, householders are billed according to the weight of their non-recycled waste. Waste levels fell by 19% and recycling rose by 49% in the first year of the scheme.

The UK is currently the only member of the EU15 to have a ban on schemes which give households financial incentives to reduce and recycle their waste.

An increase in the landfill tax escalator by £8 per year from 2008 until at least 2010/11 - announced by the then-Chancellor Gordon Brown in March 2007. Partly as a result of this, business waste landfilled is expected to fall by 20 percent by 2010 compared with 2004.