By Nina Lovelace, deputy editor
Mr Porritt, chair of the government's Sustainable Development Commission, made the comments at a high-level climate change debate organised by LGC and the Carbon Trust and attended by environment secretary David Miliband.
He told the Communities & Local Government's minister for climate change Angela Smith that her department needed to give out a more consistent message to ensure the Audit Commission improved its regulation of councils' environmental credentials.
'When we look at guidance on local area agreements, on local strategic partnerships and sustainable community strategy, on the new planning guidance, on climate change - on what you are going to do about comprehensive area assessments - are you going to task the Audit Commission to get its head around all of this?' he asked.
'Because the Audit Commission is in cloud-cuckoo-land in terms of really making sustainable development and climate change part of its engagement with local authorities.'
Carbon Trust public sector manager Richard Rugg, who was at the debate with the trust's chief executive Tom Delay, supported the call for the Audit Commission to inspect performance on tackling climate change.
'When we ask officers what is the most useful thing for you in encouraging commitment [on issues] from senior managers, they say CPA. So, it has huge potential and it has to be done right,' he said.
The Audit Commission defended its approach but said the importance of the issue would need to be made clear in the new performance framework.
Gareth Davies, the commission's interim managing director for local government and housing, said: 'The current CPA framework includes two elements relating to councils' performance on sustainability - a sustainable communities judgment as part of the three-yearly corporate assessment, and an annual rating for environmental services based on performance indicators and inspections.
'We agree that the new comprehensive area assessment proposed in the recent local government white paper will need to increase the focus on action to deliver sustainable development and address climate change at a local level.'