Charging was introduced in London in February 2003

The Institute of Public Policy Research proposal would see rural drivers pay less, but a business driver in London could pay as much as �141 more a month.

The think tank said the revenue should be used to improve public transport.

An England-wide congestion charging scheme is likely to take at least a decade to develop, the report added.

"Meanwhile, the government should introduce tolls on motorways when they are widened and promote more urban congestion charging, like the central London scheme," said report author Tony Grayling.

The proposed nationwide congestion charge would be based on global position satellite (GPS) technology.

Pollution

Under such a scheme, cars would probably be fitted with GPS tracking devices which measure their distances from satellites, pinpointing their position to within five or 10 metres.

Each vehicle would transmit its location back to a central computer, probably via the mobile phone network, which would then calculate the charges.

Mr Grayling said: "Motorists should pay for the costs of congestion and pollution they cause but motorists on low incomes should not be unfairly penalised.

Road tax as a lump sum is very unpopular, but it has to be replaced with something that isn't worse AA Motoring Trust director John Dawson

"Rural drivers would pay less while those in urban areas would pay more. But all motorists would benefit from less congestion, a better environment and improved public transport."

But AA Motoring Trust director John Dawson said the scheme would penalise those on low incomes and the "millions of people for whom the car is the only way to get to work".

"Road tax as a lump sum is very unpopular, but it has to be replaced with something that isn't worse," he added.

The institute said the money raised should not be used to cut fuel duty, which it said would lead to a 5% increase in road traffic as well as an increase in carbon emissions.

The report comes ahead of publication by the government of an independent report on the feasibility of road pricing.

Mr Grayling added that while such a scheme is contemplated, "road tolls should not be used as an excuse for building new roads, which cause damage to the environment and generate more traffic".

"The government should think twice about its proposal to build a new tolled motorway between Birmingham and Manchester," he added.

Transport Secretary Alistair Darling announced the plan earlier this month.