Responsible Travel said they were a "distraction" from climate change's real urgency and is ending its scheme.
Such schemes involve individuals paying a premium for the emissions generated by certain choices, such as flying.
The International Carbon Reduction and Offset Alliance says offsetting has an impact, but governments must do more.
Carbon offset schemes also cover things like choosing to drive a car or choices around the way homes are heated.
'Assuage your guilt'
Money raised under the schemes is used to pay for carbon reduction projects in developing countries, such as installing solar power or capturing methane gas released by farm animals.
Some environmentalists argue that while these schemes bring some benefit, offsetting has not changed people's behaviour enough and emissions covered by such schemes should be avoided in the first place.
Justin Francis, founder of Responsible Travel, said: "It's perceived as this magic pill, this get out of jail free card if you like, that means you don't need to change your behaviour.
"You can go on flying just as much as you were before, you can run your hotel the way you were before, but through this magic pill somehow you can assuage your guilt.
 |  People are using offsetting to take responsibility for their unavoidable emissions  Jonathan Shopley, International Carbon Reduction and Offset Alliance  |
"We need to be reducing the amount we pollute and I think carbon offsetting is a distraction from that."
Andy Atkins, director of Friends of the Earth, agreed that introducing offsetting alone allowed individuals and companies to continue with business as usual.
He said: "We understand why people wanted to offset in the belief that it was reducing their emissions, but it isn't working and we have to recognise now that the science says we have to cut our emissions really, at home.
"That means governments and individuals doing everything they can to reduce their genuine carbon impact and offsetting doesn't do that."
'Making a difference'
The body representing those who run the schemes insist they do bring real benefits to the developing world.
Jonathan Shopley, of the International Carbon Reduction and Offset Alliance, said: "It's not going to solve the climate change issue on its own, that's for sure. That needs government action, taxes.
"We need to stop doing certain things, but by the same account people are using offsetting to take responsibility for their unavoidable emissions and they need to understand that is a good thing and is making a difference."
Joan Ruddock, minister for the Department of Energy and Climate Change, said: "Of course [offsetting is] not a solution to climate change - it's a tiny contribution - but it does help people to think about what they are doing.
"But we do need emissions reductions on quite a different scale and that is why we have a Climate Change Act and absolute limits on our emissions in this country."
