UPDATE: Buloke Shire chief executive Anthony Judd said council's waste contractor, Four Seasons Waste, is currently stockpiling waste collected in Buloke at a holding shed it operates in Wycheproof.
"This is a short term solution only," he said. "It is becoming evident that the best solution for recycling material will be removing glass from co-mingled recycling.
"Council is currently exploring opportunities to do this."
Mr Judd said they were waiting to learn the full details of the relief package.
"We anticipate Council will be eligible to apply for funding," he said.
EARLIER: EXTRA bins for household to further separate their waste may be introduced as part of a state government overhaul of Victoria's recycling system.
The state government will work with local councils and industry stakeholders to overhaul kerbside collection and improve the quality of recyclables being collected by councils.
A new system could include extra bins for household to make it easier to recycle material.
At the most recent Council of Australian Governments meeting, Prime Minister Scott Morrison said recyclable waste is a national issue.
Concern of Victoria's recycling system comes after SKM Recycling collapse, forcing it to close its gates and stop accepting anymore recyclable materials.
Liquidators have since been appointed to SKM Recycling after Victoria's Supreme Court on Friday agreed to an application by more than a dozen creditors to wind up the company.
More than 30 local councils were affected by the closure.
Macedon Ranges Shire Council and Buloke Shire Council have their recycling collected by Four Seasons Waste who then take the waste to facilities operated by SKM.
Both councils have been forced to look for alternative options for recycling.
The state government has also announced a $11.3 million for financial relief for local councils and to invest in infrastructure to improve the quality of 100,000 tonnes of recycled materials.
The state government said SKM had been significantly undercutting the prices of other recycling providers with many local councils now paying double what they were paying SKM.
The 33 local councils affected by the SKM closure will share in $6.6 million of the $11.3 million package.
"This short-term financial relief supports councils immediately, while all levels of government work together on a longer-term solution that must include an overhaul of kerbside recycling," minister for energy, environment and climate change Lily D'Ambrosio said.
"We believe this financial assistance to councils will help them transition to meeting the real costs of recycling after decades of a failed business model from SKM."
The financial package available to local councils will also include incentives to seek alternative options to landfill for their waste.
To accept the relief package councils must also agree to be fully transparent regarding future waste contacts, provide information on current contractual rates and conditions, details on where waste is diverted to and work with the state government to reduce waste over the longer term.
The state government is also prepared work with the receiver of SKM and any prospective buyer to remove the stockpiles at SKM managed sites.