The EU has agreed a new compromise on cars and CO2 regulation after German pressure forced European environment ministers to scrap an agreement to introduce a cap of 95g/km from 2020.
The deal, if approved by the European Parliament, will mean delaying the full implementation of a 95g/km limit until 2021 from an earlier deadline of 2020.
However, the German government, which had been lobbied by its carmakers, had argued to delay implementation of the new cap until 2024 because it said the new regulations would cost jobs and damage its premium manufacturers.
The deal is being presented to EU diplomats, with a view to getting their agreement. It would then have to be signed off by member state governments and the European Parliament, which could take place next month.
Provided it is signed into law, the compromise agreement will draw a line under six months of acrimony over what other member states saw as heavy-handed negotiating tactics from Germany.
Apart from the phase-in, under which 95% of new car sales will have to comply in 2020 and 100% in 2021, it also changes the rules for "super-credits".
These allow manufacturers that make very low emission vehicles, such as electric cars, to claim extra credits for them, and enable them to continue selling more heavily polluting vehicles as well.
An agreement reached in June had set a limit for use of supercredits at 2.5 grams per year. The new deal sets a cap of 7.5 grams of carbon dioxide for the years 2020-2022, so a manufacturer could opt to use all the flexibility in the first year.
Environmental campaigners, who have been highly critical of the German stance, and of the UK Government's recent support for it, gave a cautious welcome to the deal.
Greg Archer of campaign group Transport & Environment said: "It is disgraceful that the heavy-handed lobbying of Germany has paid off in weakening the 95g target.
"Still, this revised deal will provide much needed regulatory certainty and ensure cars continue to reduce their CO2 emissions and improve fuel efficiency."
Europe currently has a 2015 new car limit of 130g/km as an average across the EU fleet, a goal many manufacturers are already meeting.