Germany blocked a deal on tougher carbon emission limits on new cars sold in the European Union to protect jobs in its powerful auto sector, Chancellor Angela Merkel confirmed on Friday.

EU officials say Merkel, who faces elections on Sept. 22, has sought to delay EU decisions on issues sensitive for Germany - including banking union and EU membership talks with Turkey - until after the vote.

An agreement earlier this week to enforce an average limit of 95 grams per kilometre (g/km) across the EU fleet by 2020 had the backing of most member states, EU sources said.

But Germany, home to premium brands such as Daimler and BMW, was unhappy with the deal. A vote by EU ambassadors to approve the compromise, scheduled for Thursday, was delayed by lobbying as Berlin played for time.

"It is true that we worked to prevent a vote on this," Merkel told reporters in Brussels at the end of a two-day summit of EU leaders, which focused on boosting growth and combating youth unemployment.

"Jobs are at stake here. At a time when we are spending days talking about employment, I think we need to ensure that in our drive to protect the environment we are not damaging our own industrial base."

Those who support tougher carbon limits for cars say they protect jobs by generating demand for highly-skilled technicians to implement the necessary innovation.

Also, because more efficient, low emission vehicles require less fuel, consumers are left with more spending power to feed into the wider economy.

Senior German politicians contacted EU governments to warn them that German car firms could scale back or scrap production plans in their countries unless they supported Berlin's efforts to weaken the emission rules, EU sources told Reuters earlier this month.