The quality of recycled material coming from households and industry needs to be significantly improved if Ireland is to have any chance of selling it.

A new Government report found a recent collapse in global demand for recyclables means low-grade material in Ireland may have to be used as fuel and burned.

Minister for the Environment John Gormley is seeking EU financial assistance to support the recycling industry.

The world demand for recycled materials has crashed as a result of the global economic recession and, according to a new report commissioned by Mr Gormley, only high-quality material is still being traded.

It appears much of the recyclables here are of poor quality, for example due to contamination, and this is causing cashflow problems for waste companies who are collecting material that no-one wants to buy.

The report says given its low-grade status, storage is not advisable. It suggests considering using low-grade recyclables as a fuel, for example in a power plant; landfilling is opposed.

Minister Gormley has said he will work to ensure that Ireland switches to producing high-grade material and, in the short-term, has raised the issue of finance with Brussels.

A report earlier this week by economic consultants Peter Bacon & Associates for Repak suggested the waste industry could incur losses of up to €39m, which means jobs are at risk.