Environment campaigners warned that new rules introduced today to ease parking restrictions in towns and cities will lead to an increase in traffic congestion and urban sprawl.

Ministers described the rules as an "end to the war on the motorists" and a reversal of measures introduced under Labour in 2001 to encourage the use of public transport.

Under the new guidance limits on car spaces in new developments will be lifted, and councils will be encouraged to set cheaper parking charges in town centres.

Announcing the moves, the local government secretary, Eric Pickles, said the existing rules unfairly penalised drivers and led to over-zealous parking enforcement. "The government is calling off Whitehall's war on the motorist by scrapping the national policy restricting residential parking spaces and instructing councils to push up charges," he said. Pickles said the new rules will allow councils to set parking policies that are right for their areas.

Richard Hebditch, campaigns director at the Campaign for Better Transport, warned that developers would use the new rules to bully councils into allow sprawling, car-dependent estates. "Our fear is that local authorities will be pushed around by developers to settle for a return to big, sprawling developments geared around the car, rather than more traditional development where the people are the priority rather than cars." He added: "Encouraging more sprawling developments is not going to create the kind of communities that people want. This it is a retrograde step."

He said reductions in inner city parking charges should only be introduced if free parking was phased out at out-of-town shopping centres.

The transport minister, Philip Hammond, said the new rules would not scupper the government desire for sustainable development because they are being introduced alongside measures to provide more charging points for electric vehicles. "This government recognises that cars are a lifeline for many people - and that by supporting the next generation of electric and ultra-low emission vehicles, it can enable sustainable green motoring to be a long-term part of Britain's future transport planning," he said.

Hebditch accused ministers of sending out confused messages. "They talk about the need to reduce carbon from transport but also encourage car journeys. They can't have it both ways. The big thing the policy ignores is how you tackle congestion. We need to cut carbon and congestion now, and there's nothing in today's policies that will do that."

Richard Dyer, transport campaigner for Friends of the Earth, said the government was reversing a Europe-wide trend that had created vibrant city centres by restricting car use. But he added: "The war on the motorist is a myth. Motoring has been getting cheaper compared to greener alternatives for many years, as the rail fare increases this week underlined. Higher parking charges are what we need to encourage alternatives to car use, so it's a great shame they are being abolished."