"In Brazil...one of the most affected areas is the state of Mato Grosso, where vast areas have disappeared to make room for soy crops destined for export," Ecologists in Action said in a report distributed at a summit on biofuels in Madrid.

Environmental organisations urged the European Union not to impose mandatory blending of biofuels in transport fuels, as part of its efforts to curb EU carbon dioxide emissions.

"Biofuels made from unsustainably sourced palm oil are not green," Michelle Desilets, director of the UK-based Borneo Orangutan Survival Foundation told the conference.

"Clearing forests for production of palm oil often involves burning," she said.

Carbon dioxide emissions from forest fires in Indonesia could easily outweigh the emissions European drivers would produce by using fossil fuels instead of biofuel in the first place, she added.

Plant-based biofuels are hailed as part of the fight against global warming. They can replace fossil fuels in transport and the plants they are made from absorb carbon dioxide as they grow.

Although the EU has surplus grain, which could be used to make ethanol to blend with gasoline, it does not grow enough oilseed to supply the biodiesel it would need for diesel powered vehicles, which are the majority in the region.

Rapidly sprouting biodiesel plants will need to import thousands of tonnes of Brazilian soy beans and Indonesian and Malaysian palm oil if they are to meet the European Commission's target of 5.75 percent biofuel use in transport by 2010.

The ecologists urged the EU not to impose these targets.

"They will foster crops that have a negative impact in greenhouse gas emissions, provoke deforestation and destroy biodiversity," they said in an open letter to conference participants.

The Commission is aware of these issues and is working on an incentive-based scheme to promote sustainably produced biofuels, said Signe Ratso, a director of the Commission's transport directorate.