Concerns from the prime minister follow a meeting with aid agencies, scientists, supermarkets and farmers which highlighted that agricultural land is being used to produce biofuels, which was in turn pushing up food prices.
The comments backtrack on the Government’s implementation of the Renewable Transport Fuel Obligation, which was put in place last week and requires petrol and diesel to contain a proportion of biofuels.
Since Tuesday of last week, 2.5% of the petrol and diesel sold at the pumps in the UK has been bioethanol or biodiesel. Under European Union targets, this is due to increase to 5% by 2010, and 10% by 2020.
Yesterday, ahead of a Downing Street summit on the world food crisis, the Prime Minister said: "Now we know that biofuels, intended to promote energy independence and combat climate change, are frequently energy inefficient.
"We need to look closely at the impact on food prices and the environment of different production methods and to ensure we are more selective in our support.
"If the UK review shows that we need to change our approach, we will also push for change in EU biofuels targets."
The review on the "indirect effects" of biofuels will be published in June.
Norman Baker, the Liberal Democrats' transport spokesman, told The Scotsman: "It's quite clear the Government has realised there is a problem.
"Biofuel isn't the answer. Biofuel, at best, was only ever a bridge. The answer, ultimately, is electric vehicles with renewable energy generation.
"Biofuels are displacing food production and, in some cases, the carbon consequences of biofuels are no better than the substances that they are replacing."