Campaigners say millions of people in the developing world are at risk
All petrol and diesel which is sold at UK pumps now has to include at least 2.5% biofuels.
These renewable fuels, made from crops such as sugar cane or maize, have been added to fuel sold around the country.
This target will rise to 5% by 2010. The move is aimed at making transport fuels more environmentally friendly and will not change how cars work.
But some scientists and green groups say biofuels contribute more greenhouse gases than they save.
The idea behind the Renewable Transport Fuels Obligation (RTFO) is to reduce climate change emissions from transport - which produced more than a quarter of overall greenhouse gases in the UK - by using renewable fuels instead of fossil fuels.
But some critics say the biofuels' carbon benefits may be outweighed by negative effects from their production.
For example Oxfam said millions of indigenous people faced clearance from their land to make way for biofuel plantations such as palm oil.
The aid agency is also concerned that the switch to energy crops from food production - including a large-scale drive in the US to produce bioethanol from maize - is contributing to rising food prices.
Oxfam joined campaigners from Friends of the Earth and the RSPB for a protest outside Parliament on Monday aimed at urging the government not to go ahead with the new rules.
But Transport Minister Jim Fitzpatrick said gradually introducing biofuels could help save millions of tonnes of carbon dioxide in the next few years.
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This might benefit the environment; it certainly doesn't benefit the poorer countries around the world
"The UK has done more than any other country to make sure they are produced sustainably," he said.
Mr Fitzpatrick said fuel suppliers would be required to report publicly on the sustainability of the biofuels they provide.
"We will not increase biofuels targets beyond 5% unless we are satisfied this can be done without damaging the environmental impacts," he said.
Shadow Environment Secretary Peter Ainsworth said the government's policy on biofuels was in "total disarray".
"The government has embarked on a course which endangers food security, threatens poverty, damages natural habitats and could increase climate change emissions," he said.
"It is utter madness that without proper sustainability criteria the Renewable Transport Fuel Obligation threatens to destroy vast swaths of rainforest in the name of the environment."
Friends of the Earth has demanded that greenhouse gases from transport, which account for about 28% of overall emissions, be tackled by investing in better public transport and mandatory emissions limits on cars.
Friends of the Earth transport campaigner Tony Bosworth said biofuels would not help the environment.
"The government is introducing these fuels because they think it's going to help cut climate change emissions from transport, but we believe they're a false solution," he said.
"In many cases some of the biofuels which they're using won't cut carbon dioxide emissions and could indeed lead to more carbon dioxide emissions."
A survey for Friends of the Earth suggested almost nine out of 10 people did not know that renewable fuels would be required in their vehicles.
Graphic illustrates findings of a Swiss study examining environmental impacts of different fuels
The further to the right a fuel is, the higher its greenhouse gas emissions were found to be
The higher on the chart a fuel is, the higher its overall environmental impact (which was worked out using Eco-indicator 99, a widely used environmental impact assessment based on damage data for various emissions)
Fuels in the green shaded area had lower greenhouse gas emissions and less of an overall environmental impact than low sulphur petrol
Most of the biofuels in the green shaded area are produced from waste materials and residue
Abbreviations: Meth. - Methanol; Eth. - Ethanol; BR - Brazil; CH - Switzerland; CN - China; FR - France; MY - Malaysia; RER - Europe; US - United States. (Country abbreviations indicate country of origin.)