Action group Notags.co.uk wants rebellious residents in south London to obstruct the radio frequency identification (RFID) microchips that are to be put in their bins.
The London Borough of Croydon sparked the dispute by distributing leaflets telling householders they will be getting bins containing the devices from the spring.
This caused a wave of controversy and led to Notags issuing a battle cry calling on residents to stop the authority spying on them.
Notags spokesman Christopher McDermott said: "We urge all residents in Croydon to find out exactly where the chip is located on their wheeled bin and place some tin foil around it. This should stop it in its tracks.
"RFID is a very controversial technology and for Croydon to bring it in like this is grossly irresponsible.
"The way this technology is being implemented will mean that residents will soon have to start justifying their buying habits to the council.
"This is one of our main concerns with the spread of RFID - the way it allows organisations to snoop in places they have no right to be."
The council's leaflet said: "We will be able to record every time your bin is emptied and minimise the number of bins missed each week.
"In future, we may be able to use the chip to discover whether any homes regularly produce more waste than would be expected for their household size.
"In such cases, we will be able to get in touch to help residents manage their waste more effectively."
But the scheme also drew criticism from the London Assembly, with Member for Croydon and Sutton Andrew Pelling comparing it to the work of Nazis.
Pelling said: "The Stasi or the KGB could never have dreamed of getting a spying device in every household. With apologies to our German European partners, the whole thing smacks of 'Ve have vays of making you manage your waste.'"
Pelling also raised concerns about households being left vulnerable to burglary if computer hackers could tell they were away on holiday by the contents of their bin.