Go-ahead for £25 C-Charge

The Mayor is also scrapping the 90 per cent discount for zone residents owning gas-guzzlers - meaning they will have to pay the full amount wherever they live.

He is also proposing, from October, that cars emitting the lowest amounts of greenhouse gas emissions, such as Ford Fiestas, Fiat Pandas and Renault Clios, should get a 100 per cent discount.

The £25 charge would be imposed for cars with CO2 emissions of 226 grams per kilometre (g/k) or above. Vehicles with 120g/k or less would pay nothing.

There was criticism from motoring groups today that the moves would turn the congestion zone scheme into an " environmental tax".

The plans, unveiled by the Mayor at his City Hall press conference, are likely to form the centrepiece of his reelection campaign.

All vehicles are rated by the Department of Transport on a scale from A to G, based on their emissions.

Until now the only total exemption from the £8-a-day charge was for electric, hybrid and bio-fuel cars, such as the Toyota Prius and G-Whizz.

Mr Livingstone has already announced a £500 million package of bicycle superhighways and a Parisstyle "hire-and-ride" scheme to get more people out of cars and onto bikes or their feet.

However, experts have warned that removing the C-charge on smaller vehicles could send congestion levels spiralling. Around 150,000 ordinary motorists currently pay the £8-a-day charge.

City Hall claims high-polluting band G vehicles, which emit more than 225g of carbon dioxide per km, make up 15 per cent of cars in the zone and that smaller band A and B cars, which emit less than 120g/km, make up just two per cent.

However, there are 68 makes of car within this limit according to the Vehicle Certification Agency.

The Mayor's aides insisted that congestion levels in central London would stay the same or even get slightly lighter under the plans. "We're convinced there's no risk of increased congestion in the first few years but we'll put in very careful monitoring so we would be able to bring in a band B charge of £4 very quickly if we need to," one said.

Green mayoral candidate Sian Berry said: "I look forward to seeing these measures finally doing something positive to reduce dirty, wasteful, unnecessarily large 4x4s and other highly polluting cars from our streets.

"There is no need for these vehicles in our cities and the evidence shows that financial penalties and rewards will make a real difference to shifting people to use public transport more or to drive a less polluting car."

The congestion charge was first introduced in February 2003 and was initially £5 a day and confined to an area of central London.

Since then, the daily rate has gone up to £8 and a western extension, incorporating Kensington & Chelsea, has been added to the congestion zone.

Tory mayoral candidate Boris Johnson has said he would scrap the western extension and bring in a "fairer" road-pricing system which would be based on need to travel. Mr Livingstone's initiative is part of his climate change action plan which aims to reduce the capital's CO2 emissions to 60 per cent below 1990 levels by the year 2025. In London, road transport accounts for 22 per cent of all CO2 missions, with cars and motorcycles accounting for nearly half of this.

AA President Edmund King said: "The question that must be posed is: "Is the congestion charge really a congestion charge or is it any emissions charge.

"Has it changed to become an emissions charge because the congestion element does not appear to be working?

"The AA is opposed to the idea of a £25 charge for band G vehicles as many of these vehicles will be older cars, estates or people carriers owned by families in London who tend to keep these vehicles longer as they do such low mileage. Why should a London family of four have to pay £25 per day for the privilege of transporting their children around London?"

Sheila Rainger, acting executive director, RAC Foundation, said: "It's a question of trust - the charge was brought in as a congestion charge, not an environmental tax.

"Ken's proposals will increase congestion - by increasing the number of smaller cars with discount - and do very little to cut CO2 in London - the real polluters are the old bangers kept on the road by motorists who can't afford to change them. People change their cars less often in London than the rest of the UK. The discount for smaller vehicles may encourage a few families to purchase them as second cars but a small car isn't a realistic choice for everyone. This is gesture politics rather than a serious attempt to tackle London's air quality problems."