The proposal was delivered in a speech to mark Earth Day. Pledging to make New York "a brighter, healthier and more economically prosperous city", Mr Bloomberg couched the charge in terms of climate change. "The science is there," he said. "It's time to stop debating it and start dealing with it."

The initiative comes as Mr Bloomberg attempts to address what one report he commissioned declared was the growing cultural, financial and commercial dominance of London.

New York's plans were introduced by Arnold Schwarzenegger, the governor of California, who presented himself as an "environmental warrior", a term he used to describe Mr Bloomberg. With the proposals, said Mr Schwarzenegger, "New York leaps to the forefront of cities dedicated to attacking climate change and protecting our environment".

The announcement came with a video endorsement from Tony Blair. "Your announcement will mark out New York as a global leader in the fight against climate change," he said, describing it as "a great act of leadership".

Mr Bloomberg's plans include measures to encourage home building, plant 250,000 trees in the city, invest in public transport and reduce air pollution. The proposals, known as PlaNYC, are expected to cost tens of billions of dollars. Mr Bloomberg, in the final three years of his administration, is seeking to cement his legacy by positioning New York City at the forefront of civic environmentalism. Opponents, though, say the billionaire mayor is penalising the city's poor by introducing a regressive tax.

"This is another tax for New York City folks," Walter McCaffrey, a lobbyist with Keep NYC Congestion Tax Free, a group representing local business and labour groups, told the New York Times. "If you're riding in a limo you can afford it. But this city is also made up of working-class people who would be hurt by it."

In comments before his speech, Mr Bloomberg did not shy away from the suggestion that the charge was a tax, a position generally shunned in American politics. "Using economics to influence public behaviour is something this country is built on, it's called capitalism," he said in his weekly radio address. He went on to outline subsidies to accompany the proposed charge, as well as pledging to spend the expected $400m it raises each year on public transport.

In 1987, then New York mayor Ed Koch proposed a $10 fee to drive into Manhattan, but withdrew the plan amid opposition from business leaders. Five years ago, in the wake of 9/11, Mr Bloomberg proposed new tolls for road bridges to Manhattan to raise money for mass transport. Those proposals too were withdrawn.

Now the mayor's camp has judged that the political climate is more sympathetic to charging. On Monday the Partnership for New York City, a prominent business group, will announce its support for the charge.

The proposal comes as the city faces population growth of 1 million over the next 20 years. Mr Bloomberg aims to encourage the building of 250,000 new homes with the introduction of tax incentives and new planning regulations.

The C zone

London moved to congestion charging in February 2003. The zone was extended into west London and doubled in size last month. Observers will be keen to see what kind of system Mayor Bloomberg seeks to implement. The London scheme, which relies on cameras and the identification of vehicles through their number plates, relies on old technology. Any renewal of congestion charging in London is likely to feature modern satellite tracking. A major issue will be the impact of the charge on business. Ken Livingstone has been forced to defend his charge amid recurring complaints from shops, restaurants and theatres that the charge damages trade. Cities like Olso and Singapore already use congestion charging.

Hugh Muir