Ministers have rejected a proposal to convert Britain’s cars to hydrogen by 2025, and called on manufacturers to develop more efficient models powered by petrol or diesel. However, several manufacturers, including BMW, have invested hundreds of millions of pounds in developing emission-free cars that run on hydrogen.

Environmental groups say that a rapid switch to hydrogen is essential if Britain is to meet its commitment to reducing the production of carbon dioxide, the main greenhouse gas. Road transport accounts for 22 per cent of Britain’s greenhouse gas emissions and its share is growing.

The Royal Commission on Environmental Pollution wants a 60 per cent reduction in Britain’s carbon emissions by 2050. The Carbon Trust, a government-funded body that promotes low-carbon technology, has advised ministers that to meet this target they should ensure that hydrogen is widely used to power cars by 2025.

But David Jamieson, the Minister for Transport, Local Government and the Regions, said that BMW had failed to acknowledge the energy savings of hybrid vehicles, which have an electric motor as well as a petrol engine. Hybrid vehicles made by Toyota and Honda are already on sale in Britain, but BMW said that its hydrogen car would not be available in showrooms until 2007.

Mr Jamieson said that renewable sources of hydrogen would not be available on a large enough scale for road transport until after 2050. He is therefore refusing to support a national network of hydrogen filling stations.

Mr Jamieson recently borrowed a Toyota Prius, a hybrid car, for a weekend and said that he was very impressed by its fuel efficiency. “I was getting just under 60 miles to the gallon. Comparable cars would be lucky to get 35.” A Toyota Prius costs £16,000, about £4,000 more than a conventional car of a similar size.

But Helmut Panke, the chairman of BMW, criticised hybrid cars as a compromise. He said: “Hybrid engines . . . only shift the burden of dealing with emissions and we don’t think they are a very important alternative.” He added, however, that motorists would have to pay a premium for the hydrogen-powered BMW 7 series, on top of the price of up to £57,000.

Professor Garel Rhys, the leading car industry analyst based at Cardiff University, said that hybrid vehicles were a short-term solution on the part of the Government which would delay the move to hydrogen. He added: “A hybrid car is 15 to 20 per cent more expensive than a vehicle with one engine. People want to be environmentally responsible but they can’t afford to be.”

Prototypes of BMW’s hydrogen powered 7-series have driven 100,000 miles during development without problems. The engine can run on both hydrogen and petrol, meaning that cars could be driven before a network of hydrogen filling stations was established. BP is to open Britain’s first such station in London next year, when a small number of hydrogen-powered buses will be introduced.

Mr Jamieson admitted that hybrid vehicles would always be more expensive than conventional cars, but he said that they offered the best chance of an early reduction in greenhouse gas emissions.