Peak charges of £4 for motorists to enter London and £2 each for Bristol and Leeds, were recommended yesterday in a report on road pricing by the rightwing think tank, the Adam Smith Institute.

The report, promoted by Downing Street, said that £1.2 billion could be raised in road charges from these cities over 10 years, leaving more than £100 million a year to be spent on local transport improvements.

The institute said that the report, Charging Ahead, would assist the Government in drawing up legislation on road charging planned for the next parliamentary session.

The Deputy Prime Minister, John Prescott, has been pressing for legislation for the past year.

But the Prime Minister has been more cautious; anxious not to alienate the motorist. The final decision rests with No 10.

The institute said that if the Government legislates next year, road pricing schemes could be introduced by 2001. The most advanced cities are Leicester and Edinburgh.

Under the institute's plans, motorists entering the three cities studied would have to pay a charge at peak times between 7-10 a.m. and 4-7 p.m. Otherwise they would be allowed free access.

The report proposes a public private partnership company made up of local authorities and road management expertise. It would be given a 30-year franchise to operate the scheme, with money raised spent on better bus lanes and a rapid transport system.

The Department of Transport favours a paper-based scheme, but the institute says that electronic schemes would be more reliable.

A tag would be fitted inside a car which would transmit its identification to a roadside antenna. This would then start the process of debiting from an account for subsequent billing.

Motorists who decide to enter these cities after 10 am would be excluded from the plan, suggesting that it would only be considered workable or fair if a road pricing charge existed all day.

The institute has examined the possibility of public resistance and comes to the conclusion that the public would be more hostile to the introduction of permits than anything else.