My local council sells this system:Doggy Dodo Dispenser Worm Farm
The Doggy dodo dispenser is a very simple, mobile worm farm to place directly in your garden. Dispensers are a recycled product, made from wheelie (garbage) bins beyond repair.
Dispensers are very simple to use, as follows:
1. Place dispenser directly in your garden in a shaded area, i.e. next to a flower bed, by a tree or against the back fence, and push a few centimetres in to the soil.
2. Add worms and castings.
3. Drop in your dog's waste.
4. Add a couple of ice cream containers full of wetted and shredded paper once a week (to provide cover for worms to attack waste efficiently)
5. Add a little water to dispenser once a week to maintain moist conditions.
6. Worms convert waste to fertiliser, for instant take-up by plants.
7. Move dispenser and worms (contained in the first few centimetres of soil) to a new patch every 3-4 months or when dispenser becomes full.
We talked about buying one but our dog in nearly 16 years old and we are not planing on getting a new dog once she passes away.
Edited to add:
I recently found this product for picking up dog poop which is fully biodegradable and you can clip it to your dogs leash:http://www.skooperbox.com