Plans to impose punitive increases in Vehicle Excise Duty (VED) on the highest polluting cars have been "poorly explained and communicated".

A Government report has backed the move as a "step in the right direction" but has said that the benefit to the environment would be "limited".

Chairman Tim Yeo has called for more ambitious changes that will ensure a more positive impact on the environment.

The report by the Environment Audit Committee said that the projected carbon savings from the introduction of new VED bands were "far less than they could be".

"We are surprised that the Treasury has risked provoking such political opposition for an environmental measure, which, according to its projections, is of limited benefit," it said.

The report urges that the Treasury should pay more attention to communicating the details and objectives of VED and other environmental taxes in the future and "should examine the case for a more ambitious reform of VED".

Official figures estimate that VED will rise for 43% of vehicles made since 2001 – but will fall for 18%.

The changes will increases the number of bands to 13, with the maximum tax for vehicles with the most emissions being £455 for 2009/10, while owners of the least polluting cars paying nothing.

According to the Society of Motor Manufacturers and Traders Limited, the Landrover Freelander 2.2 D TD4 GS will suffer the highest tax increase with the Ford Fiesta 1.2 P Zetec Climate seeing no change.

Mr Yeo said he doesn't want people to stop driving but he wants them to "choose the greenest car".

"They need the biggest possible incentive, that's why the government should be even bolder – really penal rates for high-emission cars and really attractive 'carrots' so that tax is almost nothing on the greenest models," he said.

A "car scrappage" scheme to pay drivers of high emission vehicles to switch to a greener car has also been advocated.

However, a minority report by one Tory and two Liberal Democrats have condemned the findings of the official report.

It has called for the increase to be put on hold until the government has produced a detailed analysis of how the changes would affect those on low income and whether it would make drivers buy more efficient cars.

The members say the plan is a retrospective taxation because it puts a "new tax on old cars".

Lib Dem MP Jo Swinson, one of the authors of the minority report said "the public must have faith that green taxes are not about raising revenue for the Treasure".

The RAC Foundation supports the graduated scheme of VED as it "was helping people choose smaller cars" but that it should "only be for new cars".

"The idea of making it apply to older cars is just wrong," she said.

A Treasury spokesman says the new plans will encourage people to use more environmentally friendly cars as well as save 1.3m tonnes of CO2 by 2020.

(DS)