Bush administration has lost one of the most important environmental cases in decades.

U.S. Supreme Court has ruled that the Environmental Protection Agency (EPA) now has the power to regulate greenhouse gas emissions.

In a 5-4 decision that was seen as a clear rebuke to the White House, the court said the Clean Air Act now can enforce the control over greenhouse emissions which are are covered by the Clean Air Act as they are air pollutants, justice John Paul Stevens said in his majority opinion.

Until now EPA had refused to determine carbon dioxide and other emissions from new cars and trucks that contribute to climate change. But the court said the agency offered no reasoned explanations for its unwilligness to take action.

The EPA said it was committed to reducing greenhouse gases and it was "reviewing the court's decision to determine the appropriate course of action".

"Today the nation's highest court has set the White House straight," said David Doniger of the Natural Resources Defence Council, "Carbon dioxide is an air pollutant, and the Clean Air Act gives EPA the power to start cutting the pollution from new vehicles that is wreaking havoc with our climate."

The Supreme Court ruling a massive defeat for the Bush administration which has consistenly argued that any move to cap greenhouse gas emission would be bad for business, especially for the oil industry.

The United States is the world's largest producer of greenhouse gases.