Half a million motorists could face paying up to £27.50 per day to drive in London under proposals put forward as part of a bailout package for Transport for London (TfL).
As part of the terms, ministers want to expand the London congestion charge zone to the North and South Circular roads – an area 18 times its current size.
It means many drivers face being stung by the £15 charge on top of the £12.50 “ultra-low emission zone” fee, which will be expanded to the same zone in October next year.
The controversial proposal intensified the row between the Government and the Mayor of London on Wednesday, with Boris Johnson claiming Sadiq Khan's mismanagement of TfL's finances had left it bankrupt.
Challenged by several MPs over the conditions being imposed on the transport network during Prime Minister's Questions, Mr Johnson said: "The current Mayor of London had effectively bankrupted TfL before coronavirus had even hit, and left a massive black hole in its finances.
"Any need to make up that deficit is entirely down to him, it is entirely his responsibility. Any expansion of the congestion charge or any other measure taken to improve the finances of TfL are entirely the responsibility of the bankrupt current Labour Mayor of London."
Mr Khan hit back, accusing the Prime Minister of lying to the Commons. He said: "Before Covid, I was fixing his mess at TfL – reducing the deficit by 71 per cent since 2016. Covid-19 is the sole cause of TfL's challenges."
The London Mayor had earlier told a meeting of TfL's board the proposal was a "vindictive" political stunt aimed at weakening Labour in London before next year's mayoral elections.
The expansion of the congestion zone forms part of a package of demands from the Government in return for new funding to save TFL, which has asked for £5.7 billion over the next 18 months on top of a £1.6 billion emergency funding package agreed in May.
The London Chamber of Commerce warned that the "increasingly politicised nature of the discussions is not helping" and urged MPs of all parties to work together.
Chief executive Richard Burge said: "London needs non-partisan and viable solutions to be formulated to secure the short and long-term future of its transport network, and which don't hamper economic recovery.
“Business is realistic that TfL needs to increase its revenue, but the likes of congestion charge expansion, or fare hikes, run the risk of hugely hampering economic recovery before it has even got going."
Earlier this month, Grant Shapps, the Transport Secretary, threatened to seize control of TfL and run it from Whitehall if Mr Khan failed to accept Government terms.
In a letter seen by the Financial Times, he wrote: "We will be taking reserve legislative powers allowing us if necessary to direct TfL."