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The move comes as it emerged that Associated Newspapers would stop distributing London Lite at lunchtime because Evening Standard vendors were said to be unhappy with giving out the free newspaper, which, along with thelondonpaper, damaged sales of the paid-for title.

Some 80,000 copies were handed out by Evening Standard distributors at this time, but these will now be distributed later by the merchandisers.

The two publishers, who have recently engaged in a tit-for-tat battle over allegations that their distributors dump copies, both met the council last week to discuss setting up a recycling team. The team could operate in other boroughs where the papers are distributed to cut set-up costs.

The move follows Westminster's demand for £500,000 over two years from the two publishers to cover its additional recycling costs. News International and Associated Newspapers are thought to be keen to avoid similar claims from other councils, although Camden Council told Media Week it too would look at banning the papers unless the recycling issue is resolved.

Associated Newspapers is keen to ensure that NI pays a sum proportional to the quantity of papers distributed. Currently thelondonpaper distributes around 100,000 more copies than London Lite's 400,000.

Westminster councillor Alan Bradley said: "We are in ongoing discussions with both newspaper groups and our initial meetings have been productive. This is a highly complex matter and, therefore, we do not anticipate being able to announce the final outcome of our negotiations for some time."

A spokesman for Camden said the council was looking to meet both papers to tell them "that in the long term, we may look at banning them".

He added that they were not yet at the stage of having financial discussions like those of Westminster.

The City of London said it did not have any litter problems because of its small size and the fact that many workers take their litter with them.

Both publishers have also been meeting the Audit Bureau of Circulations following the recent dumping allegations. ABC will be conducting spot checks on distributors over the coming weeks.