Volkswagen was warned against emissions-rigging eight years ago by the supplier of its "defeat devices", leaked documents show.
Bosch is said to have explained in a memo to the company that use of the software to manipulate results would be against the law.
A 2007 letter from the parts firm warned against deploying the software, according to an internal VW investigation seen by the German newspaper 'Bild am Sonntag'.
Bosch is understood to have delivered the software to Volkswagen on the basis that it was for test purposes and not for normal driving mode.
The company has previously confirmed it provided VW with components for regulating diesel exhaust systems.
Fuelling speculation other carmakers were also using the technology, Bosch said: "We supply components for exhaust after-treatment to several manufacturers. The integration is the responsibility of the manufacturer."
The German weekly 'Frankfurter Allgemeine Sonntagszeitung' reported that a VW technician raised concerns about illegal practices in 2011.
In other developments yesterday:
Volkswagen could face trouble funding leasing deals on new cars as the European Central Bank declined to comment on claims it has put a temporary ban on buying the loans that finance sales of VW cars.
Fresh allegations emerged that the UK Government was warned in 2009 by Transport Research Laboratories, a government consultancy, of serious discrepancies between on-road emissions and the results of lab tests.
New British on-road tests showed Vauxhall diesels averaged more than seven times the EU limit. Emissions Analytics (EA), which carried out the tests, said there was no suggestion of illegality. Vauxhall said: "We do not have 'defeat devices' in our vehicles."
VW has been reeling for more than a week since US regulators found its diesel engines were emitting up to 40 times the amount of nitrogen oxides than standards allow.
Some 11 million VW diesel cars built since 2008 are implicated by the scandal. The company has pledged to provide a free fix.
In Britain, more than 200,000 Volkswagen and Audi cars could be recalled to remove the devices. In Ireland, up to 80,000 vehicles could be affected.
The Vehicle Certification Agency, which oversees the testing of vehicles in Britain, is also investigating whether other manufacturers have manipulated the testing system.
Diesel motorists are likely to see their fuel bills go up as cars consume up to 5pc more fuel per mile when their pollution control systems are operating properly.
Owners of cars containing "defeat devices" have been benefiting from lower fuel consumption but emitting air pollutants far in excess of the legal limit.
The British Department for Transport is likely to re-test hundreds of models for emissions, prompting fears up to 1.5 million UK owners could be hit with backdated demands of up to €700 a year going back to 2012.
But Jason Piper, of the Association of Chartered Certified Accountants, said it was more likely that VW would be chased for the bill. He said that action over tax banding could form the basis of a criminal inquiry.
Mr Piper added: "It could potentially affect Volkswagen because clearly there is a consequence of these cars being put into the marketplace.
"This would be under the law of cheating the public revenue."
Meanwhile, Volkswagen's Italian unit has told its dealers to stop selling affected diesels, the 'Corriera della Sera' newspaper reported. That could leave 40,000 cars stuck on Italian lots. (© Daily Telegraph, London)