The Lieberman-Warner bill received a major, but hardly unexpected, blow yesterday as the White House confirmed that President Bush would veto the legislation in its current form.

Speaking before the debate on the proposed Climate Security Act began in the Senate yesterday, President Bush declared his opposition to the legislation, claiming it would impose $6 trillion of costs on the US economy.

"I urge the Congress to be very careful about running up enormous costs for future generations of Americans," Bush said at a White House meeting on the economy and taxes. "We'll work with the Congress, but the idea of a huge spending bill fuelled by tax increases isn't the right way to proceed."

Elaborating on the president's position later in the day, White House spokeswoman Dana Perino confirmed he would block the legislation should it pass through the senate in its current form. Although she added that the White House thought it was very unlikely that the bill would be passed.

She also reiterated the president's view that the proposed cap-and-trade scheme, which is designed to cut emissions by around 66 per cent by 2050, would land a crippling blow on the economy and drive up costs for consumers. "This bill would really damage our economy, [and] threaten jobs to be sent overseas because if other countries don't have the same types of regulations we do, then entrepreneurs are more likely to site those businesses elsewhere," she said.

The move prompted a stinging riposte from supporters of the bill who accused Bush of hugely exaggerating the economic impact of the legislation, citing a US government study that had calculated that the cost of the legislation would stand at less than one per cent of GDP by 2030, compared to business-as-usual projections.

They also argued that the bill contains tax relief designed to offset the impact of higher energy costs on consumers and argued that far from damaging the economy a $5 trillion package of tax breaks and incentives to be offered over the next 40 years would help create "green collar jobs".

Democrat Senator Barbara Boxer, who chairs the Senate Environment and Public Works Committee and was responsible for shepherding the legislation to the Senate floor, issued a statement accusing the Bush administration of failing to act to tackle both soaring fuel prices and climate change.

"Just when we finally have a chance to get off of Big Oil and foreign oil, you can count on the Bush administration to fight us every step of the way," she said in a statement. "Where were they when gas prices went to 250 per cent of what they were at the start of this administration? They did nothing."

Her comments were echoed by Dan Lashof, director of the Climate Center at the National Resources Defense Council, who argued that the cost of the legislation would be dwarfed by the costs of failing to mitigate climate change. “After seven years of trying to mislead us on the science of global warming, the President is now trying to mislead us on the economics," he observed. “The Climate Security Act will create good American jobs building our clean energy future, and studies by the president's own administration show that under this bill the economy will continue to grow."

Washington observers said that the bill was now very unlikely to be passed before President Bush leaves office in January 2009.

However, optimism remains that it could still secure support in the Senate with some estimates claiming that as up to 20 senators in the 100-member Senate are as yet undecided on the bill. Moreover, all three of the presidential front runners – John McCain, Barak Obama and Hillary Clinton – have signalled plans for a cap-and-trade scheme similar to that proposed under the Climate Security Act, lending its supporters further hope that the legislation could be approved next year.