Volkswagen Australia said in a statement on Saturday that it was immediately stopping the sale of vehicles fitted with 1.6 or 2.0-liter EA189 diesel engines "until the emission issues are addressed in those vehicles."

It did not say what models of the vehicles were affected.

VW's top-of-the-range subsidiary Audi also announced it was suspending the sale of vehicles with 2.0-liter EA189 diesel engines, which included Audi A4, A5 and Q5.

The announcement came a day after executives from VW and Audi met with government and consumer authorities to discuss the scandal at the carmaker, which has confirmed that 11 million diesel vehicles across the world had been fitted with software enabling them to cheat on emissions tests.

The software can detect when a car is undergoing testing and switch on pollution controls that are switched off again when the car takes to the road, allowing it to belch out emissions far above the levels allowed by law.

Huge fines possible

Some 40,000 diesel vehicles in Australia are thought to have been fitted with the so-called "defeat devices."

Australia's consumer watchdog, the Competition and Consumer Commission, is looking into whether consumers have been misled by VW, saying the company could face legal action and millions of dollars in fines if it is found to have violated Australian national safety standards and consumer law.

Sales of the Volkswagen group's vehicles have accounted for about 6 percent of the Australian car market so far this year, according to private consultancy PPB Advisory.

tj/rc (dpa, Reuters, AFP)