Hybrid cars that rely on traditional engines, such as the Toyota Prius, would be banned by 2040 under plans being drawn up by the UK government that would outlaw up to 98 per cent of the vehicles currently on the road.

Vehicles such as the Prius — the best-selling hybrid car in Britain — will no longer be classified as "environmentally friendly" enough to be sold, according to three people briefed on the government's plans to tackle emissions and air quality.

The exact wording is still under consultation between several government departments, with the transport, environment and business departments all feeding into the final document.

The plans are backed by Michael Gove, environment secretary, and Greg Clark, business secretary. But Chris Grayling, transport secretary, who has Toyota's UK headquarters in his constituency, has resisted the plans.

A spokesman for the Department for Transport said: "It is categorically untrue that government is planning to ban the sale of hybrid cars in the UK by 2040."

Last July, the government outlined plans to ban the sale of "conventional" cars from 2040.

The vague wording caused considerable confusion among carmakers, because it was unclear whether cars that use both batteries and traditional engines would be permitted.

The new document aims to clarify the government's position, and outline how it intends to grow public demand for electric vehicles in the interim years.

Three people involved in the decision said only vehicles that can travel at least 50 miles using only electric power will be permitted under the new rules.

The change in rules will outlaw more than 98 per cent of the vehicles currently sold in Britain and will require manufacturers to switch to vehicles predominantly driven by batteries, though they may have petrol engines for back-up or support.

Plug-in cars that have both large batteries and a traditional engine will also be permitted, although the exact wording is yet to be clarified, according to four people briefed on the government's plans.

There are several types of hybrid vehicles, from Toyota Prius cars, which use electric power and petrol simultaneously, to plug-in vehicles that can travel for significant distances on battery power alone.

New car sales in Britain have fallen 8.8 per cent so far this year, a decline that has led to hundreds of job cuts at Jaguar Land Rover and Nissan, as well as lost work for hundreds of dealerships.

The industry lays the blame for the decline in part on public confusion over the government's policy around future vehicle bans.

Mike Hawes, chief executive of industry body the SMMT, said: "We cannot support ambition levels which do not appreciate how industry, the consumer or the market operate and which are based neither on fact nor substance.

"Unrealistic targets and misleading messaging on bans will only undermine our efforts to realise this future, confusing consumers and wreaking havoc on the new car market and the thousands of jobs it supports."

He added: "Vehicle manufacturers will increasingly offer electrified versions of their vehicles giving consumers ever more choice but industry cannot dictate the pace of change nor levels of consumer demand.

"If government wants the UK to be a global leader in zero emission transport it must provide a world class package of incentives and support to make this a credible policy."

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