The VW emissions-testing scandal has taken a dramatic turn, with the company admitting that 11 million of its diesel cars may be implicated worldwide.

VW made the revelation in a statement which said it was setting aside €6.5bn to cover costs related to the issue - first raised by regulators in the United States last Friday.

US authorities said the firm had deliberately circumvented clean air rules on diesel cars through the use of software which was triggered when cars were undergoing exhaust tests.

The so-called "defeat devices" meant that true emission levels, as much as 40 times the level legally allowed in the US, were hidden.

The company was ordered to recall 482,000 cars.

VW said today: "Further internal investigations conducted to date have established that the relevant engine management software is also installed in other Volkswagen Group vehicles with diesel engines.

"For the majority of these engines the software does not have any effect. Discrepancies relate to vehicles with Type EA 189 engines, involving some eleven million vehicles worldwide. A noticeable deviation between bench test results and actual road use was established solely for this type of engine."

"Volkswagen is working intensely to eliminate these deviations through technical measures."

It said it was announcing the cash provision of €6.5bn as part of its efforts to win back trust from customers and pledged to communicate "transparently" in its future updates.

Environmental lobby group Transport & Environment has said that the current controversy surrounding Volkswagen diesel models could lead to a recall of thousands of cars in Europe which use the same technology.

A statement from the group said that, "Exactly the same technology is used in Europe as it is in the US, and tens of millions of cars have been sold since 2009. That mean that there are potentially millions of cars that are being driven illegally.

"Obviously it is not the drivers' fault, but it is likely we will see a huge number of recalls."

The German government has called for an urgent probe into whether VW and other car manufacturers have also manipulated emissions tests in Germany - while the South Korean Government has ordered an audit of Volkswagen diesel cars there.

The models affected in the US were, the Audi A3 which VW manufactures, and its own Jetta, Beetle, Golf and Passat models.