Drivers could be hit with a daily charge to enter Greater London under plans unveiled by mayor Sadiq Khan.

Mr Khan is threatening to introduce a £3.50 daily fee unless the Government allows the capital to keep the £500 million paid by Londoners each year in vehicle excise duty (VED).

The mayor wants this money to be invested in London’s transport network rather than go towards central funds.

He said: “If ministers aren’t prepared to play fair, then we will need to consider other options to address this unfairness, such as asking people who live outside London and make journeys into Greater London by car to pay a modest charge, which would be reinvested in London’s transport network.”

A new Greater London Boundary Charge for non-residents could see higher charges for the most polluting cars to encourage people to switch to cleaner models.

A daily charge of £15 already exists for motorists entering the centre of the city.

But Mr Khan’s plan would involve drivers with vehicles registered outside London having to pay once they enter an outer borough such as Croydon, Enfield, Hillingdon and Havering.

AA president Edmund King commented: “An entry charge to drive into London could well backfire.

“Many of the vehicles that cross the London boundary are essential service vehicles such as plumbers and electricians, or vehicles of key workers and shift workers who can’t afford to live in the capital.

“Such a charge would basically be a surcharge on workers. Few people just drive into London for fun as most have a job to do.”

Doug Parr, Greenpeace UK’s policy director, insisted the mayor is right to consider charging cars and vans that drive into London as “more than two million Londoners are living in areas with illegal levels of air pollution”.

But he urged Mr Khan to “go bigger and bolder” with measures such as a “comprehensive road charging system”, expanding walking and cycling routes across the capital and upgrading the Tube network.

A £3.50 daily fee would raise an estimated £500 million a year.

Mr Khan has asked Transport for London (TfL) officials to investigate the feasibility of the Greater London Boundary Charge, would would take at least two years to be introduced.

A spokesman for the mayor said he has “broad powers” to launch such schemes to achieve his transport strategy.

TfL’s finances have been decimated by the coronavirus pandemic, leading to it requiring a £1.8 billion Government bail-out in November to keep services running until March 2021.

In addition to raising vital funds, Mr Khan believes charging drivers to enter London could have significant benefits in terms of managing congestion, cutting emissions and encouraging people to use sustainable modes of transport.

Some 1.3 million vehicle trips are made from outside London into the city on weekdays, according to the mayor’s office, which claimed this shows many drivers “greatly benefit from using the capital’s roads without contributing to their upkeep”.

A Government spokesman said: “This Government has repeatedly demonstrated its commitment to supporting London’s transport network with more than £3 billion in emergency funding support arrangements and the recent announcement of a further £825 million loan for Crossrail.

“But we have always been clear that this support must be fair to UK taxpayers, which is why we look forward to receiving TfL’s comprehensive management plan for achieving financial sustainability as soon as possible.”