They follow an admission by VW that it deceived US regulators during exhaust emissions tests.

A DoJ criminal investigation would be serious, as federal authorities can bring charges with severe penalties against a firm and individuals.

Late on Tuesday New York state's top lawyer announced an investigation.

New York Attorney General Eric Schneiderman said he will collaborate with other states to enforce consumer and environmental law.

"No company should be allowed to evade our environmental laws or promise consumers a fake bill of goods," Mr Schneiderman said in a statement announcing the probe.

Meanwhile the Environmental Protection Agency and the California Air Resources Board are investigating the way VW cheated tests to measure the amount of pollutants coming from its diesel cars.

Volkswagen said 11 million vehicles worldwide are involved and it is setting aside €6.5bn (£4.7bn) to cover costs of the scandal.

According to Bloomberg and AFP, the Department of Justice is looking into the issue, which raises the possibility of the company and individual executives facing criminal charges.

However, the DoJ often extracts hefty payments from companies to settle criminal charges.

'Totally screwed-up'

Volkswagen is due to hold a supervisory board meeting on Friday.

But reports say that chief executive Martin Winterkorn will appear before a select group of board members before then, possibly later on Wednesday.

On Tuesday Mr Winterkorn issued a fresh apology for the test-rigging, saying he was "endlessly sorry" for the "manipulation".

Earlier, the boss of Volkswagen's US business, Michael Horn, admitted the firm "totally screwed up".

In the UK, the Department of Transport has added its voice to calls for an EU-wide investigation into the affair.

Cars and the environment - two things that Germany cares so deeply about that they form part of the national character.

So Germans are shocked to discover that for years the country's mightiest car manufacturer Volkswagen has been rigging environmental tests for diesel emissions in the US.

It's as if the British suddenly found out that the Queen had a hand in fixing the horse races at Ascot.

One German newspaper has called it the "most expensive act of stupidity in the history of the car industry".

It's stupid because manipulating pollution data to boost sales can only be seen as a slap in the face to customers who paid a premium for what they thought was a greener car.

Since the company owned up, its shares have plummeted by more than a third in just two days.

Mr Winterkorn said VW would co-operate fully with the US authorities.

In a video statement on the company's website, he said it had "betrayed the trust" of millions of people.

He added: "Swift and comprehensive clarification has now utmost priority.

"To make it very clear, manipulation at VW must never happen again."

In an earlier statement, VW said provision for the scandal would be made "in the profit and loss statement in the third quarter of the current fiscal year". This would pay for "necessary service measures and other efforts to win back the trust of our customers".

It added: "Due to the ongoing investigations, the amounts estimated may be subject to revaluation."Fines looming

Last Friday, the US Environmental Protection Agency (EPA) said VW diesel cars had much higher emissions than tests had suggested and that software in several diesel cars could deceive regulators.

As a result Volkswagen was ordered to recall half a million cars in the US.

In addition to paying for the recall, VW faces fines that could add up to billions of dollars. There may also be criminal charges for VW executives.

In its latest statement, the firm said it was "working at full speed to clarify irregularities" concerning what it called "a particular software used in diesel engines".

The EPA found the "defeat device", the device that allowed VW cars to emit less during tests than they would while driving normally, in diesel cars including the Audi A3 and the VW Jetta, Beetle, Golf and Passat models.

VW has stopped selling the relevant diesel models in the US, where diesel cars account for about a quarter of its sales.

The EPA said that the fine for each vehicle that did not comply with federal clean air rules would be up to $37,500 (£24,000). With 482,000 cars sold since 2008 involved in the allegations, it means the fines could reach $18bn.

That would be a considerable amount, even for the company that recently overtook Toyota to be the world's top-selling vehicle maker in the first six months of the year. Its stock market value is about €66bn ($75bn; £48bn).

VW has ordered an external investigation, although it has not revealed who will be conducting it.

(BBC)