The scheme is due to be submitted within days to the Department for Transport for funding. The partnership is bidding for a share of an £18m transport innovation fund set up by Alistair Darling, the transport secretary. A further £2.5 billion is due to be allocated to the fund in the next 10 years.

Other schemes set to be submitted include an extended London congestion zone by 2010 covering the area within the M25, which would be converted to satellite-based distance charging from 2014. Some experts consider the latter scheme unrealistic and say toll roads or toll zones are much more likely.

Of the capital’s plans for distance charging, Peter Hendy of Transport for London (TfL) said last week: “There is a timetable to move on to a London-wide scheme provided it was politically acceptable. We will develop local schemes and pilot projects in the interim.”

The cost to motorists had not been decided, he said, but 60p per kilometre in central London, 10p in outer London and 30p between the two was possible. TfL is also considering a low emissions zone by 2008, charging the most polluting heavy vehicles for entering the M25 ring.