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Textile recycling
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For more on marking an answer as the "Best Answer", please visit our FAQ.The best way to clear this is up is to call your local council's waste management department (number will be on their website) but generally textiles banks will accept anything that is resonably clean.
Material placed in such banks is collected and graded and the grade of the material will determine what happens to the garment/item. Charities always try to get the most value from donations and this will normally follow something like the process below.
a) The best garments may be sold in a UK charity shop
b) Items not suitable for the UK will be packaged in large bundles and sold to merchants in developing countries. (Selling them abroad to promote and sustain markets in developing countries)
c) Items are sometimes given away (often happens following disasters, particularly where blankets or warm clothing is needed)
d) Unwearable clothes or old towels etc will normally be sold to rag merchants in the UK.
Rag merchants genrally shred the textiles they buy and reform the scraps (using steam and pressure) into new, well, rags. These are sold to industry, garages etc for wiping up spills. The reformed compressed material can also be used for soundproofing in cars.
Just a note, if you want to give old clothes to charity just check that the bank is for a recognised charity. There are some dodgy operators out there (google "tvind") and the people who put notes/sacks through your door are often businesses rather than charities. Look for a charity number.
Sorry I've rambled on there haven't I ?!!