In a move destined to infuriate environmentalists, chancellor Alistair Darling is today expected to announce as part of his pre-budget review a delay to proposed changes to vehicle excise duty (VED) designed to encourage people to switch to greener cars.

The proposals were originally unveiled in March as part of the budget and were originally heralded as a green tax designed to curb transport emissions and accelerate the shift towards more fuel efficient vehicles.

Under the plans, which were due to be introduced next year, six new road tax bands were introduced based on car's emissions, including a new top band M for vehicles such as SUVs and sports cars that emit more than 225g CO2 per km.

All cars in the new band F and below, emitting 150g CO2 per km or less, would see road tax cut with band F cars paying £120 and band B cars, such as the Toyota Prius, paying just £20. Meanwhile, the most polluting cars would see their rate of VED increase, with band M cars paying £425 a year.

From 2010, further changes would have seen all new band A to D cars that emit less than 130g CO2 per km exempt from road tax in the first year after purchase. Band E to G cars emitting between 131 and 160g CO2 per km would pay the standard rate during the first year, while the most polluting cars will face a first year rate of £950.

Similar changes to taxes on business travel would have made it more expensive for firms to run high emission vehicles as company cars.

However, the proposals faced protests in the summer, with more than 30 Labour MPs signing an early day motion calling for the plans to be scrapped on the grounds that the new levies were to be applied not just on new cars, but all cars registered since 2001 – essentially making the move a regressive tax.

Now, according to a series of reports over the weekend, the chancellor is expected to delay the planned changes for at least a year as part of his widely trailed economic stimulus package.

He is expected to argue that the delay is needed to help keep costs low for motorists struggling to cope with the recession. He could also argue that with concerns over fuel costs already stimulating demand for more fuel efficient cars, there is less of a case for green taxes designed to do the same job.

However, the move is still likely to attract condemnation from green groups who have repeatedly urged the government to make a stronger defence of its green tax policy, particularly during a period of recession.

In better news for environmentalists, Darling is expected to provide further details of the government's planned energy efficiency drive, announcing plans to employ more than 10,000 people to insulate homes and public sector buildings.

A further increase in spending on flood protection measures is also expected, but those calling for a "Green New Deal" modelled on that proposed by US president-elect are likely to be disappointed.

Recently appointed climate change secretary Ed Miliband and environment secretary Hilary Benn had reportedly been lobbying the Treasury for greater investment in capital-intensive green infrastructure projects.

The strategy has also secured widespread support with the CBI, the TUC and a number of green business groups all calling for the creation of green collar jobs to help stimulate the economy and tackle unemployment, particularly in the construction sector.

Lord Smith, chairman of the government's own environmental watchdog, is also expected to add his voice to calls for such a New Deal at the Environment Agency's annual conference today.

But according to various reports, fears over the level of borrowing that would be required to deliver such an investment package have put paid to any proposals more ambitious than those already trailed.