Under current plans, all industrial and automotive batteries have to be recycled, while 45% of household batteries will have to be recycled by 2016. More controversially, retailers could be forced to take back waste household batteries at no charge to consumers.
Publishing their proposals for consultation, the Government said the message to recycle batteries was particularly important at this time of year.
Energy minister Malcolm Wicks said: 'Christmas gifts - from toys to sat navs - opened in British households next week will contain millions of batteries.
'Many of these will contribute to the 700m batteries that go to UK landfill each year.
'This is clearly not good for the environment and that's why we've signed up to these tough, but I believe achievable, targets.'
Defra waste minister Joan Ruddock encouraged producers and consumers to take part in the consultation, which runs until March 12.
She added: 'People have a vital role to play in helping Government to ensure waste is dealt with in an effective and sustainable way.
'If we are to protect our environment we must reduce the amount of waste that's sent to landfill.'
The proposals aim to find ways of increasing collection of waste household batteries to 25% of sales by 2012, rising to 45% by 2016, and prohibiting household batteries with high levels of cadmium.
Ministers also want clearer labelling which includes wheelie bin symbols, and a ban on disposal of industrial and automotive batteries in landfill or by incineration.