President Barack Obama proposed on Tuesday the first U.S. regulation of auto emissions in a bid to reduce climate-warming greenhouse gasses and lower dependence on foreign oil.

The initiative is centered around the strictest plan ever for increasing fuel standards for passenger vehicles, sharply raising pressure on struggling automakers to make more efficient cars and trucks.

Obama said at the White House the plan would give carmakers new certainty about federal regulatory policy and permit them to better plan for the future as struggling domestic companies restructure.

The status quo is no longer acceptable, Obama said. We have done little to increase fuel efficiency of America's cars and trucks for decades.

The proposal would require the U.S. passenger vehicle fleet to average 35.5 miles per gallon (6.6 litres/100km) by 2016, saving 1.8 billion barrels of oil. It would also instruct the Environmental Protection Agency to regulate tailpipe emissions for the first time.

The proposal, if finalized, would also resolve a longstanding dispute between California and the government over the state's attempt to regulate emissions to curtail global warming.

The Obama administration said California would yield to the new federal policy and that a series of lawsuits around California's efforts led by the auto industry would be dropped.

(Reporting by John Crawley, Editing by Doina Chiacu)

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