The Greens have signed onto the plan after the government gave ground, but are urging it to go further by implementing emissions standards on new vehicles.

The plan would ease taxes on a host of low-emissions vehicles, and the government claimed it would save employers $9000 and individuals $4700 on a model costing $50,000.

Subsidies for hybrid vehicles, which use a combination of electric power and petrol, were a key sticking point for the Senate crossbenchers Labor needs to pass the bill.

Both the Greens and independent senator for the ACT David Pocock have claimed credit for an agreed compromise, which would see hybrids eased out of the package and the number of zero-emissions government vehicles boosted.

They had argued including hybrids in the bill would be a de facto subsidy for fossil fuels, and counterproductive in fighting global warming.

Treasurer Jim Chalmers said Labor had worked in "good faith" with the crossbench to secure the deal.

"These changes are a win for motorists, a win for businesses and a win for climate action," he said.

"It's disappointing but not surprising that the opposition has chosen to vote against lower taxes for Australians and lower emissions."

The Greens on Tuesday revealed they would back the legislation, after Labor agreed to end subsidies for plug-in hybrids from April 2025.

Labor has also agreed to use zero-emissions electric vehicles for the Australian government's fleet, declining hybrids except in "exceptional circumstances".

Greens senator Sarah Hanson-Young said the bill would go someway to cutting EV costs by ensuring a viable second-hand market driven by regular turnover of government fleets.

But she conceded EV regulation needed to "much further", saying emissions standards are what Labor "really needs to deliver".

"It costs a bomb to run a petrol car these days. It is much cheaper to run an electric car, but you need to be able to afford to buy the electric vehicle," she said.

"That is where the government needs to drive [its efforts]."

The bill will be brought to the Senate this week, the first of a hectic sitting parliamentary fortnight of 2022.

Modelling done for the Greens showed carving hybrids out of the deal would save $1 billion over a decade.

Electric vehicle uptake in Australia, where they account for just 2 per cent of new car sales, is dwarfed by countries like Norway, where they make up 84 per cent.

Domestic uptake has been hampered by a tiny second-hand market, limiting supply and driving prices upwards.

A spokesperson for Senator Pocock said he had driven the deal by proposing the sunset clause.

The independent thanked the government for "meeting me in the middle" on hybrids, saying the agreement would allow the government to make good on its promise to bolster charging infrastructure.

"More Australians should enjoy the benefits of owning an electric vehicle, including much lower fuel costs, lower maintenance costs and a better driving experience," he said.

"Bold and decisive action is needed to address high EV prices, a lack of supply and insufficient charging infrastructure.

"We shouldn't be using taxpayers' money to fund legacy fossil fuel technologies. The opportunity is to broaden access to clean, efficient technology of the future."

Senator Pocock also said the Australian Taxation Office would provide guidance on where charging infrastructure could also be exempted from the fringe benefit tax.