Europe's biggest car market appears set to foster the development of the diesel industry, after the German Environment Ministry detailed plans for a tax break for diesel owners.

The German authorities have decided that owners of diesel vehicles with particulate filters are eligible for an annual deduction from their tax bill.

Under the new rules, cars that demonstrate particle emission below a certain threshold - initially set at 2.5 mg or less per kilometre - will see their vehicle tax fall.

The owner of a car that meets the standard could potentially deduct as much as €600 in vehicle taxes during the life of a particular vehicle, offering significant savings.

Now the ministry has sent the proposal to other relevant departments of the national government, as well as Germany's 16 state authorities, and also the European Union.

The ministry says it hopes to have the tax break in place as "soon as possible".

The government said it had decided to act now as a consequence of a study suggesting that the particles in diesel exhaust posed a high cancer risk and the rapid growth of the diesel market.

In 1990 diesel cars accounted for 13 per cent of all German cars, with that proportion now standing at 18 per cent.