Councils will have to recycle 70% of household waste by the end of the next decade, under proposals unveiled on Wednesday by the European commission. This would require a significant increase in the proportion of UK waste diverted from landfill.

At least 80% of packaging waste will also have to be recycled by 2030, as Brussels toughens its stance on the amount of rubbish buried underground. By 2025, there would be a total ban on sending waste to landfill that could have been recycled.

The new targets will be difficult for the UK to meet, as recycling rates have recently stagnated after a period of rapid growth in the past decade. According to figures released by the Department for Environment, Food and Rural Affairs (Defra) in November, 43.2% of waste in England was recycled in 2012-13. That figure was just 12% in 2001 but the UK is still well behind Austria and Germany, which recycle 63% and 62% of their waste respectively.

The coalition government has been notably hostile to moves to try to improve recycling rates through fortnightly bin collections and charges on unrecycled rubbish. Eric Pickles, secretary of state for communities and local government, declared in 2012: “I firmly believe that it is the right of every English man and woman that their chicken tikka masala, the nation’s favourite dish, the remnants can be put in the bin without the worry that a fortnight later it is rotting and making life unpleasant.”

Green campaigners said the plans did not go far enough, and that more ambitious targets would stimulate the industry and provide greater economic benefits, and sooner.

But the Department for Environment, Food and Rural Affairs sent a strong signal that it could resist the targets when they are debated. A spokesman told the Guardian: “We think the commission’s proposals may have underplayed the potential costs to business, householders and local authorities and will want to consider the impacts fully before we respond.

“While we support efforts to reduce waste we need to ensure that any new legislation would meet our priorities to protect the environment, incentivise growth and avoid unnecessary burdens.”

Steve Lee, of the Chartered Institute of Waste Management, said meeting the targets for the UK would be a challenge requiring “leadership and ambition” from the government. He called on ministers to create “a stable framework” to encourage the investment that would be needed from the private sector in the UK’s waste-management infrastructure, including new recycling plants.

A key part of the plan is to develop better markets for recycled materials. At present, much of what is recycled is returned to use in a low-grade manner – for instance, recycled glass in the UK is often used as a component in road-building materials, rather than turned back into bottles. This assigns a low value to the waste. If markets were better developed, then recyclates from metals to plastics could be sold as a resource in place of virgin materials.

Janez Potocčnik, European commissioner for the environment, said: “We are living with economic systems inherited from the 19th century [while today’s world is characterised by] emerging economies, millions of new middle-class consumers and interconnected markets. If we want to compete we have to get the most out of our resources, and that means recycling them back into productive use, not burying them in landfills as waste.”

The commission believes that the new targets could create more than half a million new jobs in waste management across the EU.

The targets will also encompass plans to combat marine litter, which is a serious hazard to aquatic life including seabirds, whales and dolphins, and food waste, which can be used to create compost and fertiliser or to generate energy from capturing the methane it produces as it rots.

Wednesday’s proposals, which will have to be debated by member states and MEPs before they can come into force, are part of an EU-wide move to a “circular economy”, in which materials once used are turned back into something productive. This involves processes that are harder to put in place than simply dumping rubbish, such as providing ways for products - from consumer electronics to cars - to be reused and repaired rather than simply broken up for scrap.

Potočnik warned that although this would create profitable businesses, the “circular economy” was unlikely to spring into being if simply left to the market: “It is profitable, but that does not mean it will happen without the right policies. The 2030 targets that we propose are about taking action today to accelerate the transition to a circular economy and exploiting the business and job opportunities it offers.”

The commission has also pledged to support new research and development in the waste management and recycling industries, and in improving the design of products to make them easier to reuse, repair and recycle. This will be done through the Horizon 2020 programme which funds innovative technology and new business processes, but officials did not say how much this funding was likely to be worth.

At present, many companies have a vested interest in ensuring their products are difficult to reuse, in order to encourage consumers to buy new models. Some existing legislation, including the directive on electronic waste, aims to counter this by forcing manufacturers to take responsibility for their products throughout their life cycle, including what happens to them when they are thrown away.