A report by the Environmental Audit Committee raised concerns about the destruction of land to grow crops to make biofuels and the lack of standards in place to police it.
MPs called for target to be set for the use of biofuels and for the Government to concentrate on sustainable biofuels such as waste vegetable oil and the development of more efficient biofuel technologies.
Tim Yeo, Environmental Audit Committee, chairman said: "Biofuels can reduce greenhouse gas emissions from road transport, but at present most biofuels have a detrimental impact on the environment overall.
"Government must ensure that its biofuels policy balances greenhouse gas emission cuts with wider environmental impacts, so that biofuels are only used where they contribute to sustainable emissions reductions."
EU Comission chiefs reiterated their commitment to biofuels targets, arguing that they are the only alternative to oil until other technologies such as hydrogen become competitive.