Plans to increase car tax next year have been described as a 'ticking timebomb'.
In a House of Commons debate, ministers were criticised by both Conservative and Labour MPs for planning to make the highest band of Vehicle Excise Duty (VED) apply to cars registered after 2001.
The Tories said that car tax will double for many families, while Labour MPs said many families could not afford to change their car.
Ministers countered by saying that the new tax bands would save 1.3 million tonnes of CO2 by 2020.
The changes, due to come into effect next year, will mean that cars will be put in one of 13 bands from A to M, based on carbon emissions.
The Treasury is abolishing exemptions for older cars from the highest rate of tax. This means that owners of larger cars bought since March 2001 will find that their road tax will rise steeply from next April, the Tories claim.
From April 2010, people buying the most-polluting cars would also pay a one-off 'showroom tax' of up to 950.
In his Budget speech, Chancellor Alistair Darling said the move would 'encourage manufacturers to produce cleaner cars'.
The Conservatives say 3.7 million people will lose 90 a year under the changes, and overall more than one million families will have their car tax doubled.
A Conservative motion, calling for the Government to abandon the planned VED increases, was defeated by 284 votes to 125 - a majority of 159.