Transport Secretary Patrick McLoughlin claims it was a mistake to cut the duty on diesel in 2001 and has hinted the policy could be reversed in the future in an effort to reduce nitrogen oxide emissions.
The Transport Secretary's recent claim comes shortly after RAC Fuel Watch revealed that motorists have been hit with a further fuel price rise.
But the motoring organisation says such a move would be a massive blow to the drivers and businesses who have invested in diesel vehicles.
Instead, the RAC says the Government should be looking to improve air quality by tackling congestion, giving motorists an incentive to buy greener cars and cleaning up ageing bus and taxi fleets.
A study also recently revealed that Britain's roads are becoming more congested and polluted thanks to reductions in Britain's school bus timetables.
Mr McLoughlin says while cutting the duty on low-sulphur fuel has reduced CO2 emissions, it has also resulted in the number of annual diesel car registrations jumping from 3.45 million to well over eight million.
Speaking to the Evening Standard, he said that is an issue the Government has got to address, adding: “It is something the Chancellor will need to look at in due course.”
Responding to Mr McLoughlin’s comments, RAC spokesman Simon Williams said: “Motorists and businesses will be aghast to hear the Transport Secretary hint at higher taxation levels for diesel vehicles.
“The present tax system has for many years favoured diesel over petrol vehicles, not least because diesel cars generally emit lower levels of CO2. Many drivers and businesses have, in good faith, invested in diesel cars for this reason.
What is more, diesel drivers contributed almost £17 billion in fuel duty last year and already pay some of the highest diesel prices in Europe.
“There is no doubt action is needed to improve air quality, however by the Government's own admission this needs to be tackled at a local level. This is something clean air zones, proposed for a number of UK cities, can help address. Additionally, incentivising motorists to take up cleaner vehicles is important.
“But there must also be a concerted effort to clean up older, more polluting bus and taxi fleets in towns and cities. The Government cannot ignore the fact that congestion levels can exacerbate pollution levels and must consider measures that keep traffic moving.”