The three areas rank in the bottom four of 51 areas from the south coast to the Hunter for household waste recycling rates.

The figures, obtained by the NSW Opposition under freedom of information laws, show Cessnock had the worst recycling rate (13.1 per cent) among those areas in 2007-08, followed by Liverpool (14.4 per cent), Maitland (18.7 per cent) and Lake Macquarie (19.1 per cent).

Newcastle (24.9 per cent) ranked 44th and Port Stephens (55.8 per cent) 12th.

North Sydney and Hunters Hill topped the list with recycling rates of 88 per cent.

Opposition spokesman Chris Hartcher has called on the NSW Government to reward councils for improving recycling rates.

Mr Hartcher said the Government paid councils $2.39 a resident under its waste bonus scheme.

"The payments are calculated purely on population and not on the recycling effort of residents," Mr Hartcher said.

"If we're going to be serious about recycling, we need to provide strong incentives."

The Department of Environment and Climate Change said Mr Hartcher had misunderstood the system.

Department spokeswoman John Dengate said it would be unfair to reward councils based on their recycling rates.

Mr Dengate said councils had to meet certain criteria, which is set higher every year, to receive the money.

"You tend to get small, highly resourced councils doing a better job than larger, more dispersed councils," Mr Dengate said.

"If you've got a council with an average land value of a million dollars, a tremendous rate base and a small geographic area, it will always be a lot easier for them to recycle."

He said larger council areas with semi-rural land faced greater hurdles, such as transport costs.

"We think there's not a lot of difference between the willingness of different residents to recycle, it's more about the geographic and economic factors," he said.

He said councils had different levels of technology, which affected recycling rates.

Mr Dengate said the department would be "ramping up the bar in recycling services that councils have to supply".

"In future, maybe everyone will get close to the Hunters Hill levels," he said.