The voluntary labelling scheme would help companies to measure the greenhouse gases associated with their their products and reduce them, said the environment minister, Ian Pearson.
"The products that businesses make, buy and sell have an impact, both on climate change and the wider environment, at all stages from raw material to when the product is no longer required," he said.
"These are created by the energy and other resources used, and the resulting emissions, in areas like production, transport and use of products as well as waste from packaging and discarded products."
The scheme would be based on a standard method of measuring CO2 emissions that can be applied across a wide range of product and service categories and their supply chains.
Products will display labels showing the greenhouse gas emissions created by their production, transport and eventual disposal, similar to the calorie or salt content figures on food packaging.
The benchmark method will be based on a pilot scheme run by the Carbon Trust and currently being tested by Boots, Walkers and other retailers.
Christine Welberry, a spokesperson for the UK Food and Drink Federation, said the association welcomed the proposal.
"We see it as a positive development as it would provide a single methodology for industry as a whole," she told FoodProductionDaily.com.
In response to a question she added: "It's too soon to say how it will affect costs.
Some examples indicate it could help companies lower costs in their supply chains."
In making the announcement yesteday the Carbon Trust and the Department for Environment, Food and Rural Affairs (Defra) said they will be working with BSI British Standards to co-sponsor the development of the standard.
Once completed the single standard will ensure a consistent and comparable approach to supply chain measurement of greenhouse gas emissions across markets, Defra stated.
Defra said the benchmark method would be the first step in moving towards an internationally agreed standard for measuring embodied greenhouse gas emissions.
"More and more, businesses are looking for ways to reduce their impact on the environment," Pearson said.
"To help them achieve that we need a reliable, consistent way to measure these impacts that businesses recognise, trust and understand."
The UK proposal on carbon labelling is part of a wider government plan to reduce the environmental impact of doing business.
Proposals on packaging waste reduction and other "green" measures are already impacting processors.
In a bid to appeal to environmentally conscious consumers retail chains have also been putting pressure on their suppliers to become greener.