In his first Budget speech, Alistair Darling said the government "wanted to be able to take action" against the "damage inflicted on the environment" by single-use bags.
"We will introduce legislation to impose a charge on such bags if we have not seen sufficient progress on a voluntary basis," he said.
Darling said that legislation, which would come into force in 2009, could lead to a 90% reduction, equating to 12bn bags.
Darling said that money raised from the scheme would go to environmental charities.
The Budget also included more help for small and medium-sized businesses in the form of a £60m injection into the Small Firms Loan Guarantee scheme for the coming year.
Darling also confirmed that non-domiciled residents, who have been in the UK for more than seven years, would have to pay a £30,000 charge to "maintain the right to be taxed differently".

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