East Riding Council is working with Waste Recycling Group to sort and recycle commercial waste which would otherwise have gone straight to a tip.
The council said it expected to be able to recycle 95 per cent of the waste.
John Skidmore, head of streetscene services, said: “Historically, business waste was not sorted but was sent straight to landfill. This is not acceptable and we have made great strides in being able to help businesses keep down their costs while improving their environmental performance.
“We are in competition with other commercial waste providers and we are trying to give them the best solution we can.”
The reduced use of landfill for business waste will also help the council keep down future waste management costs at a time when waste disposal is becoming an increasing burden.
Councils are faced with the landfill tax going up by £8 per tonne every year. By 2014, it will be costing authorities £80 per tonne in tax, on top of the cost of disposal.