The body charged with reducing CO2 emissions must continue to "build on its good work", a report has said.

A study from the National Audit Office found that the Carbon Trust has helped businesses reduce their emissions by around two million tonnes in 2006/07.

That compares to the wider UK target of a reduction of 118 million tonnes from 1990 levels by 2010.

But the auditors thought the trust was "likely" to meet its 2010 target of reducing carbon emissions by 4.4 million tonnes.

Sir John Bourne, head of the spending watchdog, said the amount of carbon saved so far was "commendable" but added that the reduction was a "small one in view of the scale of the challenge ahead".

The NAO noted that only 12 per cent of large businesses, with annual energy bills over £50,000, have worked with the trust to reduce their carbon dioxide emissions.

It suggested that working with a wider range of organisations could generate "much greater reductions in carbon dioxide emission".

And the organisations the trust has worked with have so far implemented less than 40 per cent of the carbon savings it identified between 2003 and 2006.

Sir John said that the Carbon Trust "has done a good job at persuading businesses and public sector organisations to start tackling the problem and its work to date has proved value for money".

"The Carbon Trust needs to build on its good work and extend its drive to encourage business leaders to review the carbon footprint of their organisation and to take decisive action to reduce carbon dioxide emissions," he added.

The trust is a private company which received more than £100m in funding in 2006/07.

Its chief executive, Tom Delay, said the report was "very welcome given the urgent need for business to take further action on reducing carbon emissions".

"The NAO has concluded that we offer value for money in helping businesses reduce their carbon emissions and confirms that we are on-track to deliver an annual reduction of 4.4 million tonnes of carbon dioxide emissions by 2010," he said.

"Importantly, it also finds that our innovation work, accelerating the development of new low carbon technologies, is effective.

"I believe this report gives us the green light to extend our work and has some valuable recommendations that we will  examine as part of our ongoing commitment to accelerate the move to a low carbon economy."