Drivers could save hundreds of pounds a year in fuel bills by choosing a greener car, according to figures released by Friends of the Earth. The environmental campaign group has calculated that motorists could save more money by choosing a more fuel-efficient car than they would from a 10p cut in fuel duty.

As the next stage of fuel protests rages, the green campaign group is urging the Chancellor to resist calls to cut fuel duty and to do more to encourage motorists to drive fuel-efficient vehicles.

Using government data, Friends of the Earth has calculated the cost of fuel needed to drive a car 12,000 miles a year and has found that:

• For drivers wanting a smaller car, buying a Citroen C2 rather than a Ford Fiesta could result in a fuel cost saving of up to £460 a year, or almost £40 a month. Cutting fuel tax to reduce prices from £1 per litre to 90p per litre would save the Fiesta driver around £125 a year.

• For drivers wanting a family car, buying a Toyota Prius rather than a Ford Mondeo could result in a fuel cost saving of over £630 a year, or over £50 a month. Cutting fuel tax to reduce prices from £1 per litre to 90p per litre would save the Mondeo driver around £145 a year.

• Even gas-guzzling 4x4 drivers have a choice. Buying a Toyota RAV 4 rather than a Land Rover Discovery could result in a fuel cost saving of over £1500 a year, or over £120 a month. Cutting fuel tax to reduce prices from £1 per litre to 90p per litre would save the Land Rover driver around £290 a year.

Friends of the Earth is calling on the Chancellor of the Exchequer to give drivers greater incentives to buy greener cars, by announcing in November's pre-budget statement. The campaign group wants him to cut vehicle excise duty on the most fuel-efficient cars to zero, to take immediate effect phase in substantial increases in VED on gas guzzlers, rising from the current maximum of £165 to £800 a year by 2008.

Friends of the Earth's senior transport campaigner Tony Bosworth said: "Buying a fuel efficient green car instead of a gas-guzzler could save drivers hundreds of pounds a year in fuel bills. The Chancellor should encourage more drivers to buy greener cars by putting up car tax on gas guzzlers and cutting it for the most fuel-efficient models. Cutting fuel tax won't help tackle climate change, but greater incentives to use greener cars will."

"The government must also invest more, particularly in rural areas, to provide real alternatives to having to use a car. It should also look at other measures such as council tax rebates for those hardest hit by fuel price rises, such as people in rural areas on low incomes."

"Cutting fuel tax might keep the motoring lobby happy, but it will make the government's failing climate change strategy even worse."