Congestion charging was introduced in Durham City in October 2002

Durham will receive �300,000 and the Tyne and Wear authorities �950,000 as two of just seven areas to be chosen.

Durham County Council will test the viability of extending the congestion charging scheme in Durham City.

In Tyne and Wear, measures to be considered will include park and ride, public transport improvements, parking charges and congestion charging.

Durham saw the country's first congestion charge scheme when a �2 toll was introduced in October 2002 in Saddler Street.

Radical solutions

Two possible models for extending the scheme are to introduce a charge at a specific point on the A690 or introducing a wider charge cordon around the city, combined with improved park and ride and public transport.

Council leader Ken Manton said: "The government has recognised that we are willing and able to successfully tackle those problems by introducing radical and innovative solutions such as congestion charging."

David Bollands, Gateshead Council cabinet member for transport, said: "The need for a new approach to congestion management should be obvious to anyone who has the misfortune to drive to work everyday."

The North East Chamber of Commerce said it believed the funding would provide an opportunity for the Highways Agency, local authorities and business leaders to find common ground on the issue of development along the A1 and A19.

It warned moves towards road pricing would be scrutinised to ensure the region was not put at a competitive disadvantage.