Diesel cars being sold in the UK emit an average of six times more nitrogen oxide (NOx) in real-world driving than the legal limit used in official tests, according to a Government report.
The Department for Transport (DfT) investigation found that all of the 37 top-selling diesel cars tested exceed the legal limit required for laboratory tests when driven for 90 minutes on normal roads.
But ministers insisted that no laws had been broken by the manufacturers as they are only required to meet the lab test regulations.
The inquiry, which was launched in the wake of the Volkswagen emissions scandal, also revealed the widespread use of systems for preventing engine damage which can lead to higher NOx output in real-world driving when the temperature is lower than during lab tests.
Cars meeting Euro 5 standards - which could be sold up to September last year - all had "substantially higher" emissions in real-world conditions than the 180 mg/km limit they had to be under when they passed official tests, according to the study.
The Vauxhall Insignia was the worst performer, emitting 1,881 mg/km. Even the best performer, the Citroen C4, was found to emit almost three times the legal lab level.
Cars that meet the current Euro 6 standards have a limit of 80 mg/km NOx in the lab, but in real-world driving the average level recorded was more than six times higher.
The Peugeot 3008 was found to perform the worst at more than 13 times higher.
Real-world driving emissions tests are set to be introduced in the European Union in September 2017.
Regulations are yet to be fully agreed, but it has been proposed that new diesel models will initially be allowed to emit up to 2.1 times more NOx than the current lab limit.
This is to give manufacturers time to develop ways of cutting emissions and allow a margin for error in the testing equipment.
The discrepancy will be reduced to 1.5 by January 2020.
A spokesman for the Society of Motor Manufacturers and Traders (SMMT) said the industry "acknowledges the need for fundamental reform of the current official test regime, which does it no favours".
The Government's £1 million investigation found no evidence of car manufacturers other than the Volkswagen Group fitting devices to cheat emissions tests.
Transport Minister Robert Goodwill insisted manufacturers "have not done anything illegal" by using engine management systems which reduce emissions in the lab.
But on the real-world emissions recorded, he said: "What's been disappointing is the levels of non-compliance have been higher than we'd expected."
Mr Goodwill went on: "It's a bit like, you can pass your driving test on the day that you're being very careful but then in the real world it's slightly different.
"That's the difficulty that we face."
Jim Holder, editorial director of magazines Autocar and What Car?, claimed that even though better testing regulations are being introduced, the report paints legislators and the motor industry in "a very poor light".
He said: "They have not maintained the regulations to a satisfactory standard.
"For all the rhetoric about improving public health, they have allowed that to be given scant attention for 15 or 20 years.
"They're coming in late. They delayed introducing these new regulations. They've introduced them now when they've been forced to. It's a shame they didn't do it before."
AA president Edmund King claimed consumers will welcome more accurate data on fuel efficiency and emissions from real-world testing.
But environmental group Friends of the Earth claimed the proposed new scheme is "a brazen smokescreen" that is "far weaker" than existing standards.
VW admitted last September that 482,000 of its diesel vehicles in the US were fitted with defeat device software to switch engines to a cleaner mode when they were being tested for emissions.
The German-based manufacturer announced that some 11 million vehicles were affected worldwide - including almost 1.2 million in the UK.
Transport Secretary Patrick McLoughlin said: "The UK has been leading in Europe in pushing for real-world emissions tests which will address this problem.
"Real world tests will be introduced next year to reduce harmful emissions, improve air quality and give consumers confidence in the performance of their cars."