Check with your local charity shop to see if they are accepting donations of clean, good quality blankets, doonas and sheets.
Blankets and doonas not suitable of resale can be donated to animal shelters for reuse. Make a quick phone call to the shelter first to check if they want your items.
Sheridan have a recycling program for non re-sellable sheets and towels.
Bedding and pillows not accepted at the above options go in your landfill bin (red lid).
Take larger amounts to a transfer station: https://www.kingston.vic.gov.au/transfer-stations