Plans for a massive waste disposal deal to almost eradicate landfilling in Cheshire will cost up to £847million over 25 years.

The project will include a huge waste transfer station, to be built somewhere in Macclesfield, at a location yet to be revealed.

The joint private finance initiative (PFI) project between Cheshire East and Cheshire West and Chester councils is being pursued to counteract rising landfill costs, which have reached ‘extortionate’ levels according to one waste chief.

Last year, the landfilling bill cost the council almost £4m in Cheshire East alone.

Danes Moss, Macclesfield’s residual waste landfill, is due to reach capacity in 2012.

Instead, the town’s household rubbish will be ‘bulked up’ in a large waste transfer station built somewhere in Macclesfield for the purpose, before being moved on to a treatment plant – which the council says will be environmentally friendly – for disposal.

Harold Collin, waste PFI project director, said more than 190,000 tonnes of waste was dumped in landfill sites in Cheshire East and West last year which was unsustainable.

"The project cost is a lot of money but if the councils do nothing, they will pay more over 25 years for continued landfilling, which is a waste of a resource and has a huge environmental impact," he said.

Only a tiny proportion of waste would still have to be dumped in landfills, he added.

More than £100m will come from central government but the rest will be financed by the two councils.

Two companies, Viridor and RRS, are bidding for the contract, which would see a mechanical and biological treatment plant or gasification treatment plant built in Cheshire West. The plans do not affect recycling in Cheshire East. The rate in Macclesfield was 46 per cent last year and CEC believes this will continue to rise.

East Cheshire Green Party spokesman John Knight, who stood as a parliamentary candidate in Macclesfield last month, gave the scheme a ‘cautious welcome’ but said where the plants and waste transfer stations were built would have to be chosen carefully.

He added: "Potentially, any of these technologies can be much more efficient and sustainable and less harmful to our environment than either landfill or crude incineration.

"But we are concerned that, whichever scheme is adopted, it is proposed to be run as a private finance initiative."

A winning bidder is expected to be chosen in October.

A CEC spokesman said: "Cheshire East Council will, in the coming months, identify sites for the transfer stations