As widely anticipated, London Mayor Ken Livingstone yesterday gave formal approval to plans for a tiered congestion charge based on cars' carbon emissions and issued a call for drivers of "gas guzzling" vehicles to trade them in for more fuel efficient cars which will be exempt from the charge.

The new charges are to be introduced from October 27 this year and will see the drivers of SUVs, sports cars and other vehicles that emit over 225g of CO2 per km and qualify for Band G under the vehicle excise duty pay £25 a day to enter the congestion zone. Meanwhile, drivers of smaller Band A and B cars will be exempt from the charge altogether. Mid-range cars in the remaining bands will continue to be charged £8 a day under the scheme.

Livingstone said he hoped the scheme would promote wider adoption of greener more fuel efficient cars. "Nobody needs to damage the environment by driving a gas guzzling Chelsea Tractor in central London," he argued. "The CO2 charge will encourage people to switch to cleaner vehicles or public transport and ensure that those who choose to carry on driving the most polluting vehicles help pay for the environmental damage they cause."

He also predicted that the scheme would quickly be picked up by other major cities keen to curb carbon emissions.

The changes are expected to have a major impact on London firms and drivers. Currently, 17 per cent of the cars driven in the congestion zone will qualify for the £25 charge, while just two per cent are band A and B cars that will be exempt.

Friends of the Earth director Tony Juniper welcomed the scheme, adding that wider measures to encourage use of green cars are "urgently needed".