The gap between real-world pollution and industry lab results has grown by more than 30 per cent since 2001, said the International Council on Clean Transportation (ICCT), an independent research body with offices worldwide.
Some cars, including mid-range models from Mercedes, BMW and Peugeot, were found to exceed stated emissions levels by 50 per cent, the ICCT found.
The report comes hot on the heels of German car giant Volkswagen admitting to having installed "defeat device" software in some 11 million cars since 2009 to evade nitrogen oxides (NOx) pollution standards, especially in the United States.
"Like the air pollution test, the European system of testing cars to measure fuel economy and CO2 emissions is utterly discredited," commented Greg Archer, the clean vehicles manager of Brussels-based non-profit group Transport & Energy.
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"The Volkswagen scandal was just the tip of the iceberg and what lies beneath is widespread abuse by carmakers of testing rules."
Factors other than cheating may also account for the growing gap in Europe between so-called certification testing results and actual emissions, based on mileage reported by consumers.
Car makers can underestimate road conditions that reduce fuel efficiency, such as tyre selection, wind conditions and gradients.
European regulations also make it possible for manufacturers to optimise stationary road tests -- in which cars are "driven" on rollers -- to levels not possible in real life.
And features which increase fuel consumption, such as air conditioning, are switched off during testing.
These and other measures have allowed car makers to legally pass European Union (EU) pollution tests even if actual emissions are much higher, watchdog groups say.
"Currently NOx emissions of diesel vehicles measured on the road may in reality exceed substantially the emissions measured on the regulatory test cycle," it said in an online "fact sheet" posted on September 25, the day after the ICCT results were published.