Firms once again face the prospect of paying a recycling fee on electronic hardware, as the UK government decides how best to implement an EU directive on waste.

The Department of Trade and Industry last week missed the EU deadline for implementing the Waste Electronic and Electrical Equipment (WEEE) Directive, a set of rules that will force suppliers of electrical products to recycle old appliances.

The government earlier this year came out against proposals by hardware vendors to introduce a so-called visible fee - an extra charge for hardware to cover recycling. Vendors are now pushing to introduce a £1 per appliance levy to recoup some of the costs.

"In this way customers can see that the cost has increased because of the new recycling burden," said a senior manager for a UK electronics supplier. "In the UK alone these new obligations will cost around £200m a year to implement."

Many vendors hope to reduce some of their costs by investing in new technology and innovation to reduce production bills.

The DTI faces heavy fines after failing to reach an agreement with industry on implementation of the directive. The government now hopes to introduce it on 13 September 2004 with a view to full implementation in September 2005, but many vendors said this will not give them enough time to comply.

One reason for the lack of agreement on how to implement the directive is that its terms are so broad. Vendors accept the principal that they and retailers should operate a "sell one, take one back" policy, but there are questions of how the ownership of some machines should be decided.

For example, there are still arguments over who should carry the cost of disposing of devices if they contain parts from a number of manufacturers.

Meanwhile, industry body Intellect has set up an appliance disposal firm, Repic, to operate its own waste disposal scheme.

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