According to the Scotsman, the Volkswagen Polo Blue Motion produces just 99 grams of carbon dioxide per kilometre - five grams fewer than the petrol-electric hybrid, Prius. It will be introduced in Britain in October this year.
The Polo Blue Motion 1.4 TDI 80PS, which includes a diesel particulate filter system, is among the first conventional-engine cars to be exempt from road tax because of its low emissions.
Volkswagen said the Spanish-built model was the most efficient car of its class in Europe, thanks to its engine, low weight and improved aerodynamics.
The number of diesel cars on Britain's roads has nearly tripled over the last decade to 6.1 million last year, and they now account for 22 per cent of cars.
The government rankings, compiled with What Car? magazine, feature the ten lowest -emission vehicles in 14 categories, from superminis to luxury cars. However, some models in the three largest car categories, including all those in the performance cars list, are in the highest road-tax band, designed for the most polluting vehicles.
The rankings use emissions data from the government's Vehicle Certification Agency, which is responsible for conducting the official tests to determine the emissions from cars.