Ministers are reportedly divided over plans to use more hybrid vehicles at the expense of British-built ministerial cars.
All ministers get offered a ministerial car
They have announced a 130g carbon per km target on the cars to help the government meets its carbon targets.
But minister Ruth Kelly's suggestion that the limit be lowered further to 120g/km limit met some resistance in cabinet, the Financial Times reports.
The government aims to become "carbon neutral" by 2020.
On Tuesday the government published its response to a report by the Sustainable Development Commission, which suggested that more than half of all its departments were not reducing carbon emissions enough.
It highlighted government car use as an area of particular concern, saying it emitted 1.5% more than it did in 2005/6 and was unlikely to meet its self-imposed 15% carbon reduction target by 2010.
In its response to the report, the Department for the Environment, Food and Rural Affairs (Defra) said that, from this summer, all new vehicles used by ministers and permanent secretaries will have carbon emissions below 130g/km.
The Japanese-made Toyota Prius is in widespread use across Whitehall.
But the Financial Times reports that Business Secretary John Hutton led criticism of plans to introduce a 120g/km limit on all ministerial cars, saying it sent out a bad signal to British car makers. He was said to be backed by Justice Secretary Jack Straw and Schools Secretary Ed Balls.
Ms Kelly is said to have pushed for the lower target, backed by Foreign Secretary David Miliband and Environment Secretary Hilary Benn. The newspaper reports that the prime minister asked her to do some more work on the idea.
A Department for Transport spokeswoman said she could not comment on Cabinet discussions, but about 60% of cars loaned to ministers and permanent secretaries were hybrid vehicles - of which the Prius was a common example.
She said there were "legitimate reasons" why some ministers would not use them - for example security and efficiency over long distances.
"The majority of ministers and permanent secretaries already travel in vehicles with emissions that are below 120g/km, but we are always looking to make the fleet as green as it can be," she said.
Earlier this week it was reported that trade minister Lord Jones, would be allowed to keep his two-litre Jaguar rather than switch to a low-polluting vehicle, because his job involves promoting British exports.
As older ministerial cars are retired the Government Car and Despatch Agency is supposed to replace them with electric/petrol-engine vehicles, or diesel cars with engines that run on a biodiesel blend.
The Government Car and Despatch Agency says it has more than 100 hybrid vehicles - largely Toyota Prius but also some Honda Civics - in its fleet of 171 cars and 50 other vehicles.