Under the hierarchy, waste treatments are ranked in five categories from the most to least environmentally sound: prevention, reuse, recycling, other recovery options and disposal.
The committee said that they regarded the new approach suggested by the Commission based on life-cycle analysis as too theoretical. But it said that member states should be allowed to depart from the waste hierarchy when life-cycle assessments and cost-benefit analyses indicate clearly that an alternative treatment option shows a better record.
The producer responsibility principle was also reinforced and the proposal to reclassify incineration from disposal to recovery based on an energy efficiency threshold was rejected.
MEPs called for a clear distinction between waste and its by-products that could still be used industrially, and for total waste production to be stabilised by 2012.
The decision was welcomed by environmental NGOs and the Local Government International Bureau (LGIB), who lobbied to ensure the EPs amendments were favourable to UK local government.
LGIB policy officer Helen Jackson said: It must be businesses, not the council taxpayer that pick up the bill for extra recycling. It's also a significant step to set out clearly in law some kind of order of preference for how we deal with our waste.
While Friends of the Earth waste and resources campaigner Dr Michael Warhurst said: MEPs have supported a forward-looking waste prevention policy, to halt the growth in waste production by 2012, but it is disappointing that progressive recycling targets were not adopted.
There are, however, more steps to be taken before the legislation is fully adopted. In February MEPs will vote on the proposed legislation in a plenary session.