A key European Parliament committee has given its backing to strong European Union limits on the amount of carbon dioxide (CO2) new cars should emit in a dramatic turnaround from the expected result.

The decision yesterday was greeted with delight by environmental groups, with Greenpeace praising the parliament's environment committee for "warding off disaster" and Brussels-based group Transport and Environment (T&E) saying that parliamentarians had "stood up to enormous pressure" from lobbyists.

But it was met with dismay by auto lobbies and politicians, with the association of European car manufacturers, ACEA, saying that the committee had "given the wrong signal" and "missed the opportunity to shape a realistic framework" for development.

Guenther Beckstein, conservative premier of the German state of Bavaria, which is home to major manufacturers BMW and Audi, said in a statement that "the anti-industry decision by the socialist majority in the committee endangers thousands of jobs (and) must be corrected" by the full parliament and the council of EU states.

The committee decided that car makers selling their vehicles in the EU should ensure that the average CO2 emissions of the cars they sell are no more than 120g/km in 2012.

Penalties for non-compliance should start at €20 (£) per car sold and per g/km over the limit in 2012, and rise to €95 per g/km in 2015, they said.

And the EU should bring in a further target of 95 g/km by 2020, they decided.

Ahead of the meeting, committee members had been widely expected to back a compromise proposal capping penalties at 50 euros per g/km and ruling that only the most efficient 70% of cars should be covered in the first years of the scheme.

Environmental groups had slammed the compromise as both delaying and drastically weakening the original proposals from the European Commission, the EU's executive body.

"The cumulative effect of the loopholes outlined below would be no mandated emissions reductions by 2012, the date of the official EU target," Greenpeace, T&E and Friends of the Earth said in a joint statement ahead of the vote.

The proposed law is now set to go to the parliament's plenary session on October 20-23 and to the council of EU member states, with experts saying that it is likely to face another intense lobbying battle before final acceptance.

The EU has pledged to cut its total CO2 emissions to at least 20% below 1990 levels by 2020.