Householders who recycle could be rewarded with payments of up to £30 a month under proposals due to be revealed by the Conservative Party.
Shadow Chancellor George Osborne will announce the scheme on Wednesday at an event in London hosted by an environmental group.
It is based on the success of projects in the United States, where people have been given financial incentives to recycle their household waste.
Mr Osborne will say the Government's approach of using fines to force people to recycle, is "old-fashioned" and does not work, as it encourages irresponsible behaviour such as flytipping.
In the speech he will reportedly say: "Right now, the UK has one of the lowest recycling rates in Europe.
"The Government's approach is an old-fashioned one: use the threat of fines and punitive taxation to force people to recycle. We've all seen how unpopular this heavy-handed approach has been with the public.
"Instead of using sticks we can use carrots. There is also an equity dimension. While the poorest households were previously the least likely to recycle, as soon as they started receiving a financial incentive for recycling, they typically become amongst the most likely to recycle."
Mr Osborne will give his speech at the Green Alliance's headquarters in central London on Wednesday morning.
In the US, as in the UK, councils pay a tax on every tonne of rubbish they send to landfill.
He is expected to highlight some US companies which offer to cut the landfill tax bill by increasing recycling rates.