Capita, the company which collects council taxes on behalf of local authorities, is in pole position to administer London's controversial new congestion charge.

Transport for London, the local government body in charge of the scheme, on Thursday named Capita as the "preferred bidder" for the �230m, five-year contract.

The final winner will be called on to set up and run the payment and collection systems underpinning the scheme, designed to raise �200m a year to upgrade the capital's public transport system.

The congestion charge has yet to gain government backing, with a final decision expected in March.

But being nominated is a coup for the company, which earlier this month edged the former Post Office Consignia aside to win a multi-million pound contract to run the BBC's TV licensing system.

Scheme critics

Capita also collects a total of �1.5bn a year in council taxes, and issues payslips to around 12.5 million people on behalf of private and public sector employers.

Under the congestion-charging scheme, promoted by London Mayor Ken Livingstone, drivers wishing to enter central London would have to pay a daily �5 fee, or face a �100 fine.

They would pay the charge on the day or in advance through local garages, newsagents and shops, by post or telephone or over the internet.

But critics of the scheme say it will unfairly penalise commercial vehicles which need to move in and out of the charge zone several times a day.

They add that it will displace a high proportion of central London's traffic to the suburbs, creating chaos.