State governments in NSW and Victoria are being urged to introduce traffic congestion charges in Sydney and Melbourne and plough the money raised back into public transport and motor vehicle registration discounts.

The calls are contained in a Grattan Institute report which says slugging motorists with a "modest" congestion charge during peak hours is the best way to ease traffic-clogged roads in Australia's two largest capital cities.

It also calls for a 70 per cent hikes in public car parking levies in Melbourne's CBD, and discounted public transport fares for off-peak travel.

Report author Marion Terrill says she understands that many motorists would be skeptical about a congestion charge being introduced in the most traffic-choked areas of Sydney and Melbourne.

But she believes that could be overcome if state governments earmarked money they collected to pay for discounts on vehicle registrations and upgraded public transport services.

"By giving a registration discount in return for charging, what you are really saying is that we are charging in a different way, we are not charging more," she told AAP on Monday.

"And that's an important message for people that they shouldn't think of this as just another tax, it's a charge for people who use it. If you don't use the roads in congested places in peak hour you don't pay the charge."

Congestion charges have been introduced in a handful of cities around the world including London, Stockholm and Singapore to help reduce the number of vehicles clogging the roads.

A $5 congestion tax was flagged in an Infrastucture Victoria report last year, but Premier Daniel Andrews ruled it out.

The NSW government also rejected speculation in 2012 that it was about to introduce a congestion tax in Sydney.

But the Grattan report argues that with traffic now causing sufficient delays and unpredictability in enough places, the time has come for congestion charges.

"There is a big difference between tolling roads just to raise revenue, and pricing roads to manage congestion," the report said.

"Congestion prices are not about paying for asphalt and traffic lights, but rather charging each driver for their contribution to slowing everyone else down."

The report notes that population booms during the past decade in Sydney and Melbourne are the main reason for roads becoming busier and slower.

Most commuters in both cities drive to work, with delays most acutely felt by those heading into the CBD.

The average CBD-bound trip during the morning peak in Sydney takes 11 minutes longer than it would in the middle of the night but in Melbourne it's 18 minutes more.

The report calls for Melbourne to follow Sydney in increasing CBD parking space levies and introducing off-peak public transport fares to encourage more people to leave their cars at home.

But it cautions against governments building bigger roads or changing school hours to ease congestion.