Tesco has made false claims about the source of the green fuel sold at its service stations, according to an investigation that found that the chain sold one of the most environmentally damaging types of biodiesel.

An investigation by Greenpeace found that 30 per cent of the biofuel in Tesco diesel came from palm oil. A litre of Tesco diesel typically contains 5 per cent biofuel.

Researchers from the group bought biodiesel from a Tesco filling station in Edmonton, North London, on April 3 and sent it to Germany for analysis by ASG, an independent laboratory.

The remaining 70 per cent of the biofuel was from soya – more sustainable than palm oil but linked to concerns about global food prices as fuel companies outbid other buyers.

From tomorrow fuel suppliers will be legally obliged to ensure that at least 2.5 per cent of the petrol and diesel sold in Britain comes from crops. The law is designed to reduce carbon dioxide emissions but companies are allowed to comply by buying cheap palm oil from plantations created by chopping down rainforest.

A study by the University of Minnesota, published in February, found that growing biofuel on converted rainforests, peat lands, savannas or grasslands created up to 420 times more carbon dioxide than it saved. But a loophole in the Government’s biofuel rules allows companies to disguise the origin of the crop. Tesco, which has more than 400 petrol stations and 13 per cent of the British fuel market, initially denied using any palm oil in its diesel and said that it shares concerns about the environmental damage done by palm oil.

A spokesman said initially: “The feedstock we use is rapeseed and soy. There is no palm oil whatsoever.” When pressed, he admitted that small amounts of palm oil might be used in some parts of the country. He said that the only recent example was in the North West in January when Tesco biodiesel contained 10 per cent palm oil. When told of Greenpeace’s findings, Tesco issued a new statement: “We try to minimise the use of palm oil but levels do go up and down. We wouldn’t give a set limit.”

Tesco said that the concentration of palm oil in its biodiesel was the responsibility of Greenergy, its supplier. Tesco owns 25 per cent of Greenergy. A spokeswoman for Greenergy also initially denied using palm oil but later said: “It’s a very, very small proportion of our feedstock mix.”

Greenergy is a member of the Roundtable on Sustainable Palm Oil, which claims to be trying to prevent rainforests from being destroyed to grow palms. Only a tiny proportion of palm oil has so far been certified as coming from sustainable sources.

The Liberal Democrats have uncovered a loophole that allows suppliers, when declaring the previous use of the land on which biofuel was grown, to put “unknown”. A DfT spokesman said: “We allowed this flexibility, following extensive consultation, in recognition of fact that it may be difficult to supply information when the supply chain is new. We have been clear that suppliers will only be allowed to do this for a limited time.”

The DfT has set up a review of biofuel but it is not due to report until June. Ministers may then delay or abandon plans to increase the amount of biofuel in petrol and diesel to 5 per cent by 2010 and 10 per cent by 2020.

Belinda Fletcher, from Greenpeace, said: “It’s madness that when you buy diesel at Tesco you are pumping palm oil into your tank. Palm oil is the leading cause of rainforest destruction in countries such as Indonesia. Trashing these forests for palm plantations massively speeds up climate change.”

Asda, Morrisons and BP said that they tried to use only sustainable palm oil. Sainsbury’s did not return calls.

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