Greenpeace UK offered new Labour a piece of advice from old Labour: in the words of Denis Healey - "when in a hole, first stop digging".

Launching its Sane Energy Campaign in Edinburgh, Greenpeace said a policy of digging for more oil, even as burning the world's known reserves caused catastrophic climate change, was simply madness.

The group also highlighted what it called the hypocrisy of European governments for paying lip service to the fight against global warming while subsidising fossil fuel and nuclear industries by more than £9 billion each year.

The chairman of Greenpeace UK, Robin Grove-White, pointed out that the Labour manifesto spoke of putting concern for the environment at the heart of policy making.

"As the climate scientists are telling us with increasing clarity, in the case of fossil fuels and the climate, business as usual spells disaster ... now new Labour has the chance to set Britain in a new direction."

The Intergovernmental Panel on Climate Change predicts that if carbon dioxide levels in the atmosphere continue to rise, the global average increase in temperature will be 1.5C to 3.5C by 2100.

"It is clear that fossil fuels must be phased out - they will not run out as some people think," said Greenpeace's deputy executive Chris Rose.

"Since the oil shock of 1973, oil reserves have grown in every year but three and, on average, two barrels of oil have been added for every one used.

"The oil industry is storing up the fuel that can, quite literally, destroy nature."

He added: "We believe Tony Blair can and should change that reality and he, Robin Cook and his colleagues should give a lead to all nations in starting the process of ending fossil fuels."

One of the so-far untapped solutions to Britain's energy needs, Greenpeace said, was solar power. The energy campaign's director, Jane Wild-blood, said: "British politicians seem to think that solar technology won't work in Britain. It does, it works all year round, in summer and in winter, even in the rain."

Japan, she pointed out, was moving away from a dependency on fossil fuels and positioning itself to lead the new global market in solar technology. The Japanese government plans to build 70,000 solar-powered homes by 2005.

Greenpeace has a ship off the west of Shetland that is "surveying marine life" but the vessel is widely expected to take part in some form of direct action against BP and other oil companies soon to begin exploration in the Atlantic Frontier oil fields.

A spokesman for the Department of Trade and Industry disputed the claim that fossil fuels were oversubsidised.

"We do not subsidise oil and gas, in fact we tax them. As for nuclear power, that has historically been supported to a substantial degree but that is coming down and will eventually come to an end," he said.

"Clearly there is a demand for oil and gas and if it is not met from UK waters it will be met from elsewhere."