The Freight Transport Association (FTA) is urging the government to cut diesel duty by 50 per cent.
The European Parliament is due to begin consulting over Europe's road freight market from the beginning of next year and the FTA wants the government to act now.
Currently, foreign hauliers may not undertake contracted work in a foreign country but EU proposals want this to be waived to allow a maximum of three in seven days.
But Britain wants to see these proposals go even further and Parliament has called on the EU to make it seven journeys in seven days.
If the changes go ahead it would allow foreign operators to purchase cheap fuel in Europe and win contracts in the UK on that cheap fuel despite not paying fuel tax or Vehicle Excise Duty.
According to the FTA this would give foreign firms an eight per cent cost advantage compared to the UK.
James Hookham, managing director of policy and communications at the FTA, said: "Under Parliament's proposals, high taxed UK hauliers will be exposed to the full force of foreign carriers using low-cost fuel purchased on the continent.
"UK carriers simply cannot compete against such a price advantage," he said.
