Collection would be tendered out to private firms which served restaurants and food-processing plants.
A year-long trial was under way in the Waikato town of Putaruru, where householders were invited to put their leftovers, bones and teabags in a commercial compost collection.
Members of the collective feared that a council-run green-waste collection would ruin their $9 million enterprise, which served 65,000 homes at no cost to ratepayers.
They could instead help the council reduce recyclable green waste in the household rubbish from the present 10.4 per cent to 3 per cent.
A council spokeswoman said yesterday that bylaws made by former councils remained in force. The former Auckland City Council, Waitakere City Council, North Shore City Council and Rodney District Council restricted green waste in refuse collections.
However, the former Manukau City, Franklin District and Papakura District had no restrictions on putting green waste in refuse bins.