The former CIA chief and now chairman of the US advisory board of the Clean Fuels Foundation said: "Hydrogen and fuel cells are not the way to go.
"The decision by the Bush administration and the State of California to follow the hydrogen highway is the single worst decision in the past few years."
He said a hydrogen infrastructure will cost the US alone one trillion dollars.
"In the meantime you have to bring down the cost of a fuel cell vehicle by a factor of about 40 or 50 to make it affordable."
Mr Woolsey sees a bright future for 'plug-in' hybrid electric vehicles - using both an electric motor and a conventional petrol or diesel engine, as 78% of cars in the US do less than 40 miles a day.
This is well within the range of electric power, would cut the dependence on oil and keep the option to do longer journeys, he said.
And using off-peak, overnight, charging would avoid the need for a big increase in the output of America's electricity grid.
"The important thing is that there should not be a single solution or decision by governments. There should be a portfolio of ideas."