Volkswagen has admitted that 11 million cars have been sold with engines that could use suspect software to dodge strict emissions tests.

As calls grow for a European investigation into the scandal the company said it had set aside £4.7 billion to deal with the inevitable fall out.

Volkswagen said in a statement that it is "working intensely to eliminate these deviations through technical measures."

Transport groups said tens of thousands of cars on UK roads could be recalled after America's Environmental Protection Agency (EPA) found the company had cheated clean-air rules before ordering it to recall nearly half a million diesel models built in the last seven years.

However, it still is not clear if UK vehicles will have to be recalled.

Although today's statement from VW admits the problem is wider than just the US, cars sold in the UK were designed to meet lower emissions standards and may not need any attention.

The company said: "Further internal investigations conducted to date have established that the relevant engine management software is also installed in other Volkswagen Group vehicles with diesel engines. For the majority of these engines the software does not have any effect.

"Discrepancies relate to vehicles with Type EA 189 engines, involving some eleven million vehicles worldwide. A noticeable deviation between bench test results and actual road use was established solely for this type of engine. Volkswagen is working intensely to eliminate these deviations through technical measures. The company is therefore in contact with the relevant authorities."

In the States the scandal has engulfed Golfs, Jettas, Passats and Audi A3s fitted with the EA 189 four-cylinder turbodiesel engine.

The US government announced it was widening the investigation to other manufacturers, while the European Commission (EC) has contacted VW and US authorities over the findings.

Campaign group Transport & Environment (T&E) claimed the technology used in the VW cars, in the form of devices that allowed its diesel cars to release fewer smog-causing pollutants during tests than in real-world driving conditions, was used by other car makers.

T&E's diesel expert Jos Dings said: "All the evidence points to exactly the same thing going on in Europe and potentially even worse.

"Diesel cars in Europe operate with worse technology on average than the US.

"We are the diesel market but they have dug it up because they take law enforcement seriously."

Mr Dings warned that millions of cars could be recalled.

"We are calling for European authorities to take their job seriously," he added.

"We sell more than 12 million cars in Europe and half are diesel.

"Our latest report demonstrated that almost 90% of diesel vehicles didn't meet emission limits when they drive on the road. We are talking millions of vehicles."

The EPA's findings cover 482,000 cars including the VW-manufactured Audi A3, and the brand's own Jetta, Beetle, Golf and Passat models.

The agency said cars had been fitted with sophisticated software to switch engines to a cleaner mode when they are undergoing official emissions testing. The system is known as a "defeat device".

Once on the road, the cars produced nitrogen oxide pollutants at up to 40 times the legal standard.

An estimated 29,000 deaths each year in Britain are caused by long term exposure to air pollution.

The Clean Air in London campaign described the affects of diesel vehicle emissions as the "biggest public health catastrophe".

The organisation's founder, Simon Birkett, said: "If manufacturers have deliberately contributed to that problem in some way the only way to get to the bottom isn't a police investigation but something that has much wider powers.

"There are a lot more questions than answers and one of the questions will be if (the practice) extends beyond one manufacturer.

"Have we had a cartel operating or some sort of collusion? I think therefore very genuinely we need a royal commission to investigate."

With the world's top-selling car maker facing billions of dollars in fines and a plunge in share prices, VW chief executive Martin Winterkorn said: "I personally am deeply sorry that we have broken the trust of our customers and the public.

"We will co-operate fully with the responsible agencies, with transparency and urgency, to clearly, openly, and completely establish all of the facts of this case. Volkswagen has ordered an external investigation of this matter.

"We do not and will not tolerate violations of any kind of our internal rules or of the law."

Today the company added: "To cover the necessary service measures and other efforts to win back the trust of our customers, Volkswagen plans to set aside a provision of some 6.5 billion EUR recognized in the profit and loss statement in the third quarter of the current fiscal year."

More ominously, it admitted: "Due to the ongoing investigations the amounts estimated may be subject to revaluation.

"Volkswagen does not tolerate any kind of violation of laws whatsoever. It is and remains the top priority of the Board of Management to win back lost trust and to avert damage to our customers. The Group will inform the public on the further progress of the investigations constantly and transparently."

The Society of Motor Manufacturers and Traders (SMMT) insisted there was no evidence that manufacturers in the UK attempt to mislead emission testers.

The trade association's chief executive, Mike Hawes, said: "The EU operates a fundamentally different system to the US - with all European tests performed in strict conditions as required by EU law and witnessed by a government-appointed independent approval agency.

"There is no evidence that manufacturers cheat the cycle. Vehicles are removed from the production line randomly and must be standard production models, certified by the relevant authority - the UK body being the Vehicle Certification Agency, which is responsible to the Department for Transport.

"The industry acknowledges, however, that the current test method is outdated and is seeking agreement from the European Commission for a new emissions test that embraces new testing technologies and is more representative of on-road conditions."