Harrow Council has signed a 12-month deal to sell its recycling to a struggling private company after making nearly £1million from a similar contract last year.

The borough’s dry recyclable waste will be collected by Viridor and sent to its plants in St Helens, Midlothian and Lancashire to be turned into new products, after the council held its first online auction between firms bidding to win the contract last week.

Last year, Harrow made £900,000 from a similar deal in which 19,000 tonnes of blue bin waste was sold, but hopes to make more by encouraging competition by its new online auction system.

The borough has one of the best recycling rates in London, with more than 50 per cent of household waste avoiding landfill.

But Viridor, which partners other councils across the country, warned last month of a plunge in trading after a fall in recycling prices and has been cutting costs and renegotiating contracts as economic woes take their toll.

Deputy leader Councillor Thaya Idaikkadar said that the model had been successful because of the high recycling rate in Harrow.

He added: “I urge residents to recycle even more because you are not only protecting front-line services from cuts you are protecting the planet from waste being unnecessarily sent to landfill.

“I am delighted that we have been this successful which will hopefully become common practice across all local authorities in years to come.”