Suggestions that local councils should charge for rubbish collection have been dismissed by Downing Street.

Downing Street admitted that its influential Performance and Innovation Unit, which is based in the Cabinet Office, had been indulging in more "blue sky thinking" about household waste.

Britain's landfill sites are fast becoming full so the unit is considering ways to increase levels of household recycling.

It has suggested that household should be charged £1-per-sack alongside a free recycling service.

"There are no plans yet but we do have the PIU looking at this," said the official spokesman.

The final report was a least two months away and it was yet to make any final recommendations, which would not necessarily be acted upon. The media were "getting ahead of themselves".

"We need to be clear about what the role of the PIU is; which is to ask the difficult questions, it is to think the unthinkable," said Number 10.

"What nobody should do is jump on the fact that the question is asked and make the automatic assumption that it is government policy. There is an issue here about how we dispose of household waste which has to be dealt with."