London's rubbish could be used to generate enough electricity to power up to two million homes and provide heat for 625,000 houses, according to a report.
The London Assembly study said the capital produces around 22 million tonnes of waste each year, enough to fill Canary Wharf tower every eight days.
Currently, more than half London's grubbish ends up in landfill, with only a fifth (22 per cent) being recycled, the research said.
Converting non-recyclable rubbish such as leftover food into energy, through methods that do not involve incineration, could reduce the amount sent to landfill - an increasingly expensive option as the tax on dumping waste in the ground is high and rising.
Creating gas from the rubbish which can be used for heating or generating electricity could also cut London's carbon dioxide emissions by 1.2 million tonnes and reduce another greenhouse gas, methane, which is produced when waste breaks down in landfill.
It will also help meet the government targets to source 15 per cent of the UK's total energy from renewable sources, the Where There's Muck There's Brass report from the Assembly's environment committee said.
The committee urged London Mayor Boris Johnson to take the lead in developing the technologies to convert energy from waste such as anaerobic digestion, gasification and pyrolysis.
The technologies face a number of barriers, including public opposition, difficulties obtaining planning consent and long-term existing contracts for rubbish which prevent potential companies obtaining waste material.
Murad Qureshi, chairman of the London Assembly Environment Committee, said: "London's waste management is unsustainable and uneconomical. The mayor must take the lead on further measures to help jump-start waste management step change.
"Waste to energy technology will help the capital reduce greenhouse gases, cut down on waste sent to landfill, increase renewable energy generation, benefit the economy and create jobs," he said.
McDonald's announced that 25 of its London restaurants were implementing an energy-from-waste programme, diverting rubbish from landfill sites to use in a power plant which converts it into energy for UK homes and businesses.
The scheme, originally piloted in Sheffield, will divert 2,500 tonnes of waste from landfill every year, reduce emissions from rubbish and generate enough energy to light every home in London for an evening, the company said.
A spokesman for Mr Johnson said: "The mayor wants Londoners to recycle more, send less waste to landfill and take advantage of the massive economic opportunities available to the capital if we start to manage our waste more efficiently.
"We know that currently 75 per cent of London's household waste is either landfilled or incinerated, while around 90 per cent of municipal waste could actually be reused, recycled or used to generate greener energy.