The rules, dubbed "Euro 5", could go into force by mid-2008 and are the latest in a series of regulations designed to reduce car emissions that pollute the air and damage human health. The previous Euro 4 rules went into force in January this year.

"Our ideas are ambitious, but realistic. The new emission limits will open the way to cleaner cars," Industry Commissioner Guenter Verheugen said in a statement.

"This is good for the health of our citizens and the environment. Industry gets a clear perspective and the time to prepare to produce clean, high quality cars without endangering its competitiveness," he said.

The proposals seek emissions reductions in new cars with diesel and petrol or gasoline engines.

Diesel cars would be required to reduce emissions of particulate matter by 80 percent to 5 mg/km compared to the 25 mg/km set in Euro 4, the current rules. Nitrogen oxide (NOX) emissions must be dropped by 20 percent.

In petrol-powered cars, a reduction of 25 percent in NOX and hydrocarbons emissions is foreseen, as well as the introduction of a particulate emission limit.

Particulates can cause cancer and cardio-vascular problems, while NOX is blamed for lung disease and contributing to ozone formation, environmentalists say.

SUVs, which are becoming more popular in Europe, have previously been exempt under a rule that gave looser standards to heavy vehicles. The Euro 5 rules stipulate passenger cars that weigh more than 2500 kg may not use "less ambitious" standards for light commercial vehicles, the Commission said.

The new standards are applicable to all cars imported into the EU. That means top producers from the United States and Asia must join European auto giants from countries like Germany and Italy in cleaning up new car emissions.

Industry reacted cautiously on Friday. One automobile industry official, who asked not to be named, said there would not be enough time to adjust to the rules, which would come into force between 18 and 36 months -- depending on the car -- after formal adoption by the European Parliament and member states.

The Commission expects the rules to go into force by mid 2008 at the earliest.

"A lead time of 18 months is definitely not sufficient for the industry," the official said. He also disputed the need to clean up gasoline engines, which he said did not harm the environment.

Environmentalists said the proposals did not go far enough.