Britain's credibility as a leader in the fight against climate change has suffered a massive blow with the Government being forced to announce it will not meet its flagship target for cutting the carbon dioxide emissions causing global warming.

The target, to cut UK CO2 emissions from industry and transport to 20 per cent below their 1990 levels by 2010, will be missed by a wide margin, even after an intensive, year-long review of all the measures in the Government's climate change programme, designed to bring it within reach.

The announcement yesterday of the policy failure came on the day that MPs began an inquiry into a new way of fighting climate change, and Independent readers responded in their hundreds with their own ideas about how to tackle the greatest threat now facing human society.

It was a distinctly unhappy Margaret Beckett, the Environment Secretary, who had to admit that the full set of revised policies, from energy efficiency to emissions trading, would now only deliver a CO2 cutback of from 15 to 18 per cent by the target date. If the result is at the lower end of the range, the policy review will have achieved virtually nothing, as it was set up in 2004 after the realisation that only a 14 per cent cutback was on the cards.

The Government had encouraged the belief that the review would make the 20 per cent figure attainable. The size of the failure stunned observers, as well as embarrassing ministers and eliciting contemptuous criticism from environmental groups and opposition parties. There can be no more flagrant example in all of Labour's years in office of the gross miscarriage of a key policy. The 20 per cent CO2 target has been the headline Labour Party green pledge since 1994 and has been earnestly repeated in three successive manifestos as well as in the 2003 energy review.

Speaking in Auckland last night, Tony Blair called for a "technological revolution" to stabilise climate change and give companies the confidence to invest in the future of the planet. He said developing technology in the private sector was the key to tackling the problems of energy security and greenhouse gases facing world leaders.

Yesterday, Mrs Beckett was joined by other senior ministers to put as brave a face as they could on what is, in image terms, a catastrophe for a government that has striven to take an international lead on climate change, with Mr Blair giving it particular emphasis. The Trade and Industry Secretary, Alan Johnson, the Transport Secretary, Alistair Darling, the Minister of Communities and Local Government, David Miliband, and the Financial Secretary to the Treasury, John Healey, all tried to present the revised climate change programme in a positive light, but they looked glum about it.

Friends of the Earth said the performance was "pathetic" and called for a new law to make the Government legally responsible for reducing UK CO2 emissions. Greenpeace said that "even Arnold Schwarzenegger [the Governor of California] has more demanding carbon reduction targets than the UK".

The World Wide Fund for Nature said Mr Blair's credibility over climate change was "in tatters". Peter Ainsworth, the shadow Environment Secretary, said the review was " a grim admission of failure on what was meant to be one of Mr Blair's top priorities".

The Green MEP Caroline Lucas said the review "won't make the slightest difference to a government that likes to talk about tackling climate change whilst pursuing the very policies ­ road-building, airport expansion and encouraging low-cost airlines and private transport ­ that exacerbate it. "

Asked why the review had failed, Mrs Beckett said it had "turned out to be much more difficult to deliver the target than anybody had anticipated when it was set." She said: "Some of the measures have just not delivered as much as people thought." Specifically, she blamed higher energy prices for the failure to control rising CO2 emissions ­ the rise in the price of gas has meant that power generators have been switching to coal, which is more carbon-intensive.

She also blamed the unexpectedly strong growth of the economy. Yet this is the very point made in The Independent yesterday by Mr Challen, who contends that the pursuit of economic growth makes controlling CO2 an impossibility, and that a different path must be sought. However, it is clear that there have also been fierce arguments behind the scenes between ministries representing different economic sectors, and that Mrs Beckett's Department for Environment, Food and Rural Affairs, which took the lead on the review, has been stymied in its CO2-cutting ambitions by interests representing business. The lesson that can be drawn from the spectacular failure to deliver the target is to realise how hard it is to cut carbon emissions by tinkering at the edges of a capitalist economy in full growth mode. It is now clear that the pursuit of economic business-as-usual is simply not an option, as Mr Challen strongly contends.