The ambitious German programme, which is costing hundreds of UK jobs, aims to recycle more than 80 per cent of packaging materials by 1996. This has led to rubbish exports swamping the world's waste material markets.
Michael Howard, Secretary of State for the Environment, and Michael Heseltine, President of the Board of Trade, have asked their German opposite numbers to rein back over-zealous waste collection. Senior civil servants from both countries will discuss the issue early next month. Whitehall officials have already met with the French, who share their concern.
So far little of the rubbish mountain has reached Britain. The real damage to UK recycling results from the advantage German manufacturers gain over competitors. Because recycling is increasingly compulsory in Germany, paper mills and plastics firms that consume wastes as raw materials now receive them free of charge or are even paid to take them.
But their British rivals pay for waste paper and plastic, which is the only reason local councils and waste- paper merchants collect it. Baled plastic waste had been fetching up to pounds 100 a tonne, but the price has halved.
To stay competitive, British manufacturers are having to slash what they pay their local collectors, or switch to German imports or virgin raw materials. Whichever option they take, recycling suffers.
'It's devastating,' said Peter Williams, chief executive of David S Smith, Britain's largest paper maker and user of recycled paper. 'Recycling was the future of Britain's paper-making industry. Now it has been brought to a standstill.' His company has taken its case to the European Commission.
Linpac, Britain's biggest producer of recycled plastic products, predicts that plastics recycling in Britain could collapse in the next few months. It says it will soon have to switch from using UK waste to cheaper German imports in order to remain internationally competitive.
From 1 January German manufacturers and retailers were obliged to take back all packaging - bottles, cans, plastic and paper containers - from the consumer, free of charge, at the point of sale.
The result is that the supply of waste packaging has soared. Germany will export some 40,000 tonnes of waste plastics this year, says the European Centre for Plastics in the Environment in Brussels.
A tenth of Britain's packaging and cardboard manufacturing capacity closed in the second half of last year with the loss of 500 jobs. The Germans were as much, if not more, to blame than the recession, according to the British Paper and Board Industry Federation.