Taxpayers’ money is being used to pay “covert human intelligence sources” who report bad conduct to authorities.
Anyone who photographs dog fouling, litter being dropped, graffiti crime or fly tipping which result in prosecution will receive a cash reward.
The amount is staggered, according to how far the prosecution is taken.
If a court summons is issued the snooper gets £100. On a conviction he gets £150 and if the offender gets a maximum sentence he receives £500.
The scheme has been given the Big Brother-style motto “See them, report them”.
It tells residents: “We need your eyes and ears to help us wipe out enviro-crime.” The local council scheme is being launched in London and could eventually be rolled out across the country.
Last night the payments were slammed by critics who said they were a waste of vital public funds.
TaxPayers’ Alliance spokeswoman Susie Squire said: “People are sick and tired of being spied on by their local councils.
“There are far more constructive and cost-effective ways to encourage people to obey the law.
“This initiative is going to cost us dear – in terms of financially and damaging community spirit.”
Doretta Cocks, founder of the Campaign for Weekly Waste Collection, said the scheme for recruiting spies was shockingly reminiscent of East Germany’s Stasi secret police.
Waltham Forest council’s Conviction Reward Scheme was introduced last week after the council claimed residents wanted more to be done to tackle environmental crime.
Their website says that the “reward scheme” offers cash to “anyone providing evidence that leads to a prosecution against enviro-criminals, including graffiti, fly-tipping, dog fouling and littering.”
The council describes the money as a “thank you” for alerting them to crimes.
The scheme is just the latest example of councils paying residents for information on offences.
Some UK councils are even paying children to supply them with information on environmental offences like leaving recycling bags and rubbish bins out on the pavement.
Harlow Council, in Essex, employs 25 Street Scene Champions, aged between 11 to 14 who are encouraged to report vandalism to bus shelters, graffiti, abandoned vehicles, fly-tipping and other offences.
Crawley Borough Council, in West Sussex, has 150 Streetcare Champions who are asked to “report on individuals if known”.
Other local authorities recruit adult volunteers and at least 4,841 people are already patrolling the streets in their spare time. Some are assigned James Bond style code numbers, which they use instead of their real names when they ring an informer’s hotline.
Last week it emerged councils are still using surveillance technology to spy on suspected minor offenders despite being banned by law.
Since 2003 they have only been able to use undercover methods in suspected criminal law cases.
But Chief Surveillance Commissioner Sir Christopher Rose said it was of “significant concern” that local authorities were going beyond what was allowed.