THE Government has launched the first steps in a radical new environmental strategy that will force fleets to clean up their act - but it has refused a plea for more cash from a key partner in its campaign.

Despite hopes that the Government-funded Powershift project would double to £20 million a year to help the alternative fuels market reach 'critical mass', Deputy Prime Minister John Prescott announced on Monday the scheme would not receive any cash boost.

Instead, funding for the scheme, which provides vital grants to help fleets take on alternative-fuelled vehicles, will remain at £10 million a year for the next three years, despite predictions that demand for 'green' vehicles will double next year to 34,000.

Prescott also committed £9 million in Government funds to kick-start use of fuel cell vehicles and a further £30 million to clean up emissions from buses, taxis and private vehicles.

Although it will not provide more cash, the Government is warning fleets that if they do not move willingly to cleaner vehicles, they will be forced to change as company car tax and Vehicle Excise Duty push fleets into embracing the 'green road'.

The changes are part of one of the toughest environmental strategies yet compiled by any national Government worldwide that will herald the death of the internal combustion engine.

Environment minister Michael Meacher warned: 'The switch away from the internal combustion engine must be one of the key strategic changes for the longer term', adding that an 'early shift' to non-oil based transport was essential to tackling global warming.

Fleets must also switch to alternative fuels such as liquefied petroleum gas, Meacher warned in the Government's newly-published 'green bible' called 'Action to Tackle Global Warming'.

Ministers are forcing the pace of change as world experts predict there will be a 40% global shortfall in fuel stocks in the next 20 years. The strategy unveiled in the Government's 200-page report clearly places pressure on fleets to change, with policies including:

• Work with Europe to improve car efficiency by at least 25% by 2008-2009, backed up by CO2-based Vehicle Excise Duty and company car tax
• Cut UK greenhouse gas emissions to 23% below 1990 levels by 2010
• Examine the possibility of cuts of 60% in emissions worldwide
• Launch an emission-trading scheme, backed with a £30 million grant, so the cleanest companies can profit from their efforts
• Roll out energy labels, including new labels for cars, next year
• Launch an early shift away from oil-based fuels.

But despite the Government's environmental battle, few fleets are paying attention.

A new survey of public sector fleet managers by First National Vehicle Contracts found that 54% of fleets do not have an environmental policy and that 48% of fleets would not even consider trying alternative fuels, while several recent surveys showed a lack of environmental interest among fleet managers.

The Government report singled out just one fleet as an example of what could be achieved through change - BT. This year, the firm has registered the use of emissions for energy, transport and refrigerants, while from next year it will log emissions from use of car hire, rail travel and air travel.

Over the past eight years, BT has cut the size of its vehicle fleet by a quarter to 38,218, cut energy use by 23% and saved £119 million.