Mr Dimas wanted to set compulsory targets for car makers who have so far failed to make good on voluntary commitments made in 2004.

However, he is being opposed by Mr Verheugen who does not want the car industry to be bound by mandatory targets.

Reuters reports that commission president Jose Manuel Barroso, who has recently thrown his weight behind the EU's green targets, also supports binding legislation and has called for more time so that a consensus can be reached.

Under the 2004 agreement, European car makers pledged to reduce CO2 emissions to an industry average of 140 grammes per km - or 25% of 1995 levels - by 2008, but are set to miss this target. Asian manufacturers, also not on target, made a similar commitment a year later.

Since it became apparent that car makers were not on track with their voluntary commitments, Mr Dimas has been making noises about legislation.

He has indicated that he wants to make manufacturers reduce CO2 emissions of new cars sold in the bloc to an average of 120 grammes per km in 2012.

For its part the car industry thinks it is being unfairly targeted by the commission and argues that the proposals will make the industry less competitive and will cause job losses.

The green versus industry debate is a relatively new fault line in the commission which has only recently very publicly tied its colours to the environmental mast, seeing long term economic benefits.

Mr Verheugen illustrated the division in a letter to Mr Barroso in November.

"We need to demonstrate environmental leadership, but there is no point in doing so if we have no followers — especially if this comes at significant cost to the EU economy," his letter stated.

"Our growth and jobs priority must not be endangered," Mr Verheugen said.