Charity shops waste about £4.5m a year on the sorting, recycling and storing of unsuitable donations, according to the Association of Charity Shops.
This figure is expected to rise significantly as commercial waste-disposal charges - which charity shops have to pay - continue to increase.
Legislation allows local authorities not to charge charity shops for disposing of waste, but the vast majority have to pay.
Unsuitable items left outside shops often include torn and dirty clothing, broken crockery and books with pages missing. False teeth and a glass eye have also been left.
Up to 5 per cent of items donated to charity shops are recycled or thrown away.
Lekha Klouda, executive secretary at the association, described the issue as "a major concern".
She explained: "Charity shops are being hit twice by this issue. First, the amount of unsaleable donations to charity shops is increasing. Second, the commercial waste-disposal charges are rising significantly year on year to encourage less waste to go to landfill. As a consequence, charity shops are having to dispose of more donations and pay increasing charges for doing so."
Oxfam estimated it spends £500,000 a year dealing with unsuitable donations - as much as its entire expenditure in Rwanda or Eritrea in 2005. The charity says the amount is likely to rise to £1m because of proposed landfill tax increases and legislation about the disposal of electrical equipment.
Oxfam has launched an initiative, called Sorted, to encourage members of the public to sort through their donations before dropping them off at Oxfam shops.
"We're so grateful for the incredible donations we receive from the community but, like any retailer, there are things we can and cannot sell," said Chris Coe, director of trading at Oxfam.