The call came as part of a large-scale campaign to coincide with World Environment Day, warning that councils will not hit recycling targets.
Currently, councils can apply for a slice of Defra's£135m waste minimisation and recycling fund.
But Claire Wilton, senior waste campaigner at Friends of the Earth, said: 'We want waste management money ring-fenced within that. Local authorities do not support this because they want the freedom to spend how they see fit.'
The government's target is to recycle 25% of municipal waste by next year and 30% by 2010.
Lichfield DC has one of the highest recycling rates in the country. It increased recycling from 33% to 43% during 2002-03.
Lichfield DC corporate director of operational services Ruth Plant said there was a need for 'cross-party political support for any change because it is a sensitive service for local government'.
Dacorum BC waste services manager David Austin said the council was boosting compliance using a 'carrot and stick approach'.
He said: 'If people don't participate [by putting rubbish in the right bins] we won't collect the excess waste outside the bin.'
But the council is on target to reach 27% by the end of this year and 36% by the end of 2005-06.
Mr Austin said ring-fenced funding would help: 'If you are rewarding good service, it should be ring-fenced for the service being provided.'