"Without transparency, consumers will have little confidence in purchasing or otherwise dealing in offsets," the report by the House of Commons Environment Audit Committee said.

"The government must act quickly," it added, while criticising as too restrictive a recent British proposal to tie the voluntary market to the existing Kyoto standards.

"This unnecessary restriction could seriously affect the growth of the (voluntary) market," it said, adding that the regulated market had for example largely bypassed emissions-cutting projects in Africa, something the voluntary market could redress.

Illustrating the need for standards, the report cited one voluntary offset project where lack of water killed plants which had been intended to absorb carbon dioxide and offset greenhouse gas emissions from concerts by the British rock band Coldplay.

Another concern is that offsetting delays more fundamental efforts by companies and individuals to cut their own greenhouse gas emissions.

The report cited evidence from the World Development Movement that monthly carbon emissions by the British bank HSBC rose in 2005, the year that it said it went carbon neutral. Going carbon neutral means offsetting all your emissions. Businesses could be forced to offer carbon offsetting to customers for some energy-intensive activities, the report added, and poured scorn on British Airways' efforts.

"Since its offsetting scheme with Climate Care was launched in 2005, British Airways has encouraged the purchase of only 1,600 tonnes of offsets on average each year, approximately the emissions from four return flights to New York," it said.

"This is risible."

The trade in voluntary offsets is booming, especially as businesses like Google, Yahoo, Marks and Spencer and News Corporation take steps to go carbon neutral, with estimates varying from a doubling to a tripling in traded volumes last year.

Monday's report also called for a simplification of rules under Kyoto's regulated offsetting scheme, called the Clean Development Mechanism, saying it was too bureaucratic, too expensive, and favoured big industrial projects too much.