Francis Maude has been told withdraw advice that motorists stockpile petrol on "jerrycans" in preparation for a strike by fuel tanker drivers.
The Cabinet Office minister said on Wednesday morning that "a bit of extra fuel in a jerrycan is a sensible precaution to take".
However the Fire Brigades Union said advising motorists to store cans of petrol in their garages was wrong as it could be illegal as well as dangerous.
The union warned it would "massively increase" fire and explosion risk and the public should be discouraged from doing so.
Matt Wrack, FBU general secretary, said: "This is not sensible advice and people should be discouraged from doing so. The general public does not properly understand the fire and explosion risk of storing fuel, even if it was done sensibly.
"Those without garages may be tempted to store fuel in the home. In the event of a fire in the house or a neighbouring property, it would be disastrous.
"It is already against the law to store more than 10 litres of petrol in two five-litre plastic containers in the home. As that amounts to little more than a third of a tank in most cars, the advice is of little practical help.
"There is a real danger the public will start storing fuel in inappropriate ways if the Government is encouraging panic buying and storage. This advice is wrong and must be withdrawn."
The was also criticised by the South Wales Fire & Rescue Service, who said they did "not advise storing petrol in a jerrycan in domestic garages".
Labour has accused the government of spreading panic as it moves to distance itself from any industrial action by unions.
"It’s the height of irresponsibility for Downing Street to give the impression that people should be panic-buying. They should be using all their efforts to get a settlement," a party spokesperson said.