Diesel fumes are significantly more damaging to health than those from petrol engines, according to research which shows that related air pollution contributes to lung disease, heart attacks, asthma and other respiratory problems.

The findings, published by the Department for Energy and Climate Change, are an embarrassment for successive governments, which have encouraged a switch to diesel since 2001 by linking road and company car tax to CO 2 emissions. Diesel engines have been billed as "green" by car makers, governments and environmental groups because they are more fuel-efficient and emit less CO 2 than petrol. Vehicles with low fuel economy and high CO 2 emissions are further penalised by higher fuel duty tax, while diesels with the lowest CO 2 emissions are not subject to road tax or congestion charges. Insurance premiums are also affected by cars' CO 2 status. Last year diesel car sales overtook those of petrol-fuelled cars for the first time. Petrol car sales are now 15% lower than in 2011.

The government accepts that air pollution from all sources contributes to about 30,000 deaths a year in Britain. But the research estimates that diesel-related health problems cost the NHS more than 10 times as much as comparable problems caused by petrol fumes. Last year the UN's World Health Organisation declared that diesel exhaust caused cancer and was comparable in its effects to secondary cigarette smoking.

Anti-pollution groups, already furious that the government has failed to meet EU air pollution legal limits, say no account is being taken of the health damage done by diesel fumes because CO 2 emissions are seen as the sole benchmark for environmental responsibility.

Last week Simon Birkett, founder of the Campaign for Clean Air in London watchdog group, accused the government of deliberately exacerbating health problems by in effect subsidising diesel. "Successive governments have known all about the [health] problems of diesel but have failed to react and covered them up. They have known for a long time that diesel is the main source of pollution in cities and have continued to subsidise it," he said. Air pollution from all sources, including transport, was calculated by the Commons environmental audit committee to cost Britain up to £20bn a year. "Air quality is a hidden killer but it's not on anyone's radar and its costs are not factored in by the Treasury. This is the unintended consequence of ignoring it," said Joan Walley, the committee's chair.

Partly as a result of the rising number of diesel vehicles, London is regularly failing to meet EU air pollution targets, say experts. "Emission regulations have been ineffective for diesel cars," said Martin Williams, chair of the UN's convention on long-range transboundary air pollution. "Levels of nitrogen oxide emissions, for instance, haven't fallen significantly over the past 20 years."

A Campaign for Clean Air in London report, due to be published next month, will claim that car company figures for diesel pollution are unreliable and that actual emissions are probably far greater. "Just as most most drivers struggle to match a car's official fuel economy figures in everyday driving, emissions of air pollutants in real world driving conditions differ from those suggested by the vehicle's [Euro] standard," it will say.

A 2011 test by government to measure emissions from vehicles in everyday use concluded that, while petrol emissions had improved by 96%, "emissions of NOx [nitrogen oxide from diesel cars and light goods vehicles] have not decreased for the past 15-20 years".

A spokesman for Transport for London said: "The congestion charge was designed to reduce traffic rather than pollution. It is not an overriding objective to reduce pollution rather than congestion."

Major cities in India and elsewhere have become increasingly aware of the health costs of diesel exhausts and are considering imposing higher taxes on diesel cars or even banning them from city centres.