The European Commission said it doesn’t have the powers to launch an EU-wide investigation into Volkswagen falsifying car emissions.

It comes as the UK Government called on the Commission to start a probe “as a matter of urgency”.

Volkswagen, whose Chief Executive Martin Winterkorn has resigned, admitted around 11 million vehicles worldwide could have been fitted with software which misled regulators. It announced it has set aside €6.5 billion (£4.8bn) to help cover the costs.

The software allowed cars to pass stringent environmental checks despite them emitting up to 40 times more pollution than claimed, according to the US Environmental Protection Agency (EPA).

UK Transport Secretary Patrick McLoughlin said: “We are closely monitoring the situation and have been pushing for action at a European level for more accurate tests that reflect driving on the road. It’s vital that the public has confidence in vehicle emissions tests and I am calling for the European Commission to investigate this issue as a matter of urgency.”

The Commission is encouraging all Member States to carry out the necessary investigations and report back.

The Commission added: “We are taking the matter very seriously. We need to get to the bottom of this. For the sake of our consumers and the environment, we need certainty that companies scrupulously abide by the rules. We have zero tolerance when it comes to fraud.

“Investigations are ongoing within Volkswagen as well as in the US and in several Member States. The Commission is in contact with Volkswagen, Member States and the US Environmental Protection Agency and the California Air Resources Board to establish the facts. We need to understand the details of the recent recall of Volkswagen vehicles in the US and we need to understand the potential implications for vehicles sold by Volkswagen in Europe.”