Gordon Brown is to introduce a four-tier system of road tax for new cars which will penalise gas guzzlers and reward owners of more environmentally-friendly vehicles.

The chancellor is also thought to be planning to increase fuel duty in the budget by no more than the inflation rate to cushion the impact on the retail prices index of soaring oil prices.

In a move aimed at bolstering his green credentials, Mr Brown is expected to announce that, from the autumn, the vehicle excise duty payable on new cars will be based on their emissions of harmful greenhouse gases, which are directly linked to fuel efficiency.

New cars will be divided into four bands, with the owners of those emitting the most carbon dioxide paying around £180 a year for their tax disc and those at the bottom of the scale paying around £100.

It is thought the two middle bands, into which most vehicles will fall, will be priced at around £120 and £150.

Cars registered before the system is introduced will continue to be taxed under the existing regime which is based on engine size.

There are currently two categories of vehicles for excise duty purposes, with the owners of those with engines of less than 1100cc qualifying for a £55 discount on the standard fee of £155. The treasury estimates that 1.8m motorists receive the small car discount, introduced in last year's budget.

The shake-up of the road tax system, which was introduced in 1909 as a charge for road building and maintenance, forms part of the government's effort to encourage cleaner cars.

To appease motorists who believe that the government is anti-car, Mr Brown is expected to announce that petrol duty will be indexed to inflation for the first time since 1992.

In the pre-budget report, the chancellor said he was abandoning the so-called fuel duty escalator, which automatically puts duty up by 6% more than inflation each year, and in the future would decide policy annually.

Motoring organisations had expected Mr Brown to opt for a 2% rise over and above inflation.

But soaring oil prices at a time when Britain is well on its way to achieving its internationally-agreed target for reducing carbon dioxide emissions convinced him of the need to be lenient towards car owners.

It will also minimise the impact on the retail prices index, which in recent years has risen sharply as a result of budget measures, threatening to start a wage/price spiral.

High carbon dioxide emissions tend to come from bigger engines, but experts say that is not always the case.

Motorists can check emission rates and fuel efficiency of car models in a booklet published by the vehicle certification agency.

The cleanest

1 MCC Smart 115 (C0<->2 g/km)

2 Daihatsu Kuore 127

3 Perodua Nippa 129

4 Suzuki Swift 130

5 Daihatsu Sirion 132

The dirtiest

1 Lamborghini Diablo 590

2 Ferrari 530

3 Aston Martin Lagonda 511

4 Chrysler Jeep 483

5 Rolls-Royce Bentley 456

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