Scientists have said that nitrous oxide, which is popularly known as "Laughing Gas", is being released in the environment by a number of species of bacteria.
Unlike carbon dioxide and methane, world leaders have largely ignored laughing gas as a worrying greenhouse gas.
"But nitrous oxide must be taken more seriously," said Professor David Richardson from the University of East Anglia in Norwich, UK.
According to Professor Richardson, "It (nitrous oxide) only makes up 9% of total greenhouse gas emissions, but it's got 300 times more global warming potential than carbon dioxide."
"It can survive in the atmosphere for 150 years, and it's recognised in the Kyoto protocol as one of the key gases we need to limit," he said.
The potent gas is mainly coming from waste treatment plants and agriculture. Its release is increasing at the rate of 50 parts per billion or 0.25% every year.
According to scientists, the major source of nitrous oxide are many species of bacteria, which can switch from using oxygen to nitrates when faced with a shortage of oxygen.
"Nitrates can support their respiration, the equivalent of our breathing, and bacteria can get energy through processes called denitrification and ammonification. When they do this, nitrous oxide is released into the environment," said Professor David Richardson from the University of East Anglia in Norwich, UK.
Municipal sewage treatment plants, landfill sites and marshy areas polluted with too much agricultural fertiliser are all places teeming with so many bacteria that there is a shortage of oxygen for all of them to survive using normal respiration alone.
This means they need to use other respiratory strategies, which release nitrous oxide into the environment.
The researchers are using a combination of laboratory based studies, fieldwork and computer modelling to understand better the key environmental variables that make different micro-organisms release nitrous oxide.
"Global warming affects everyone, and understanding the biology of nitrous oxide emissions will be an important step in mitigating their impact," said Professor Richardson.
"We urgently need to start developing better strategies to improve management of these emissions in the agricultural and waste treatment sectors," he added.