The devastating effect that tax free fuel for airlines has on global warming is laid bare in an EU report being studied by MPs.

Aviation fuel is untaxed, in spite of the growing evidence that it is undermining international efforts to reduce the damaging gases that cause global warming.

The EU Commission report says if the current rate of growth in air travel is continued, it will result in 150 per cent increase in emissions from international flights from EU airports by 2012.

That will offset more than a quarter of the reductions required under the Community's agreed Kyoto target.

On current trends, the Commission says that aviation emissions 'will become a major contributor' of greenhouse gases.

However, the EU and Britain, current holders of the EU presidency, have been accused by environmental lobbyists of ducking hard decisions over aviation fuel.

Rather than tax the fuel, the EU commission is preparing to include it in the trading scheme for harmful emissions that cause greenhouse gases, and will be tabling legislation next year.

Tony Blair yesterday clearly hinted that he will give the go-ahead to a new generation of nuclear power stations, but stopped short at taxing aviation fuel.

"You don't set out as Prime Minister or as a Government to be deeply unpopular," he said when appearing before a group of senior MPs.

"On some of these issues to do with climate change - you can see it with some of the debate on nuclear power - there are difficult decisions that governments have got to take in the long term interests of the country." He added: "None of us in politics deliberately courts unpopularity.

In relation to climate change there are real issues about energy security and supply that will mean decisions that are bound to be controversial." Airlines have lobbied the Government to oppose any move to tax aviation fuel, warning that they will fly to countries where it is not taxed to refuel if an EU-wide tax is brought in.

Ministers also fear a backlash by passengers if taxes lead to higher fares, particularly by low cost airlines.

The EU Commission said a 70 per cent improvement in EU fuel efficiency had been 'more than offset by the even higher growth in traffic, leading to an increase in the impact of aviation on the climate'.

While the community's total emissions of those greenhouse gases controlled under the Kyoto protocol fell by 5.5 per cent between 1990 and 2003, those from international aviation increased by 73 per cent corresponding to an annual growth of 4.3 per cent.

The EU commission report says that commercial aircraft cruising at altitude emit carbon dioxide, the most important greenhouse gas, nitrogen oxides, which have a net warming effect because they produce ozone but reduce atmospheric concentrations of methane, and also water vapour which triggers condensation trails.

Under the UN framework convention on climate change, greenhouse gas emissions from international air traffic are accounted in a different way from other emissions, due to a lack of consensus about who should be responsible for them.

As a consequence, only domestic emissions of carbon dioxide are included in national emission totals.

The Commission warns this removes a key part of the political pressure to implement measures in other sectors.

It says international aviation should be included in any climate change regime after 2012.

Elliot Morley, Britain's environment minister, said a working group had been set up and its findings will be fed into an ongoing review of the existing framework of the community's emission trading scheme, which is due to report by 30 June next year.

'We are pressing for the development of an open emissions trading system for international aviation,' Mr Morley added.

He said the UK was holding back the weapon of taxation, but was pressing for the inclusion of aviation in the emissions trading scheme as a priority for its presidency, which ends next month.

The Government is pressing for improved working practices at airports to cut emissions; research for new technologies; and voluntary action by airlines to develop sustainability strategies.

He added: 'We recognise that these measures may not provide a total solution.

Therefore we continue to explore and discuss options for the use of other economic instruments.'