The Treasury is being urged to reconsider plans to scrap a major tax break for firms that develop brownfield sites after experts warned it could force more developers to shift their attention to greenfield locations.

Currently, firms can claim exemption from landfill tax for waste that arises from the development of contaminated land.

However, the government has undertaken a consultation on abolishing the tax break and a recent update from HM Revenue & Customs hinted strongly that it would scrap the exemption by confirming it had already developed a series of " transitional arrangements" to be undertaken should the government "decide to proceed with the abolition of the landfill tax exemption".

A final decision is expected to be announced at next month's budget, but experts are urging the government to retain the tax break or risk undermining the financial case for redeveloping brownfield and contaminated sites.

Ian Viney, director at green consultancy WSP Environmental, said that with landfill tax set to rise to £28 per tonne from April, the abolition of the tax break would have a "significant impact" on the business case for brownfield developments.

For example, on a site developing 10,000 cubic metres of waste the abolition of the tax break would add over £500,000 to the developer's costs.

"The government's thinking is that by making waste more of a financial burden it will encourage more sustainable onsite recovery and recycling of waste," he said. "But for smaller sites in particular this is not always possible and, given brownfield sites already have higher development costs to begin with, this could discourage some projects from going ahead."

He added that if the government scraps the exemption, developers working on contaminated sites will have to react quickly to ensure they meet a proposed deadline of 30 November 2008 for receipt of applications for tax-exemption certificates.

The Treasury was unavailable for comment at the time of going to press.