The London congestion charge introduced by the mayor, Ken Livingstone, has cut traffic so successfully that he faces a cash crisis because drivers are avoiding the charging zone, according to figures released yesterday.

So many cars have kept out of central London since the charge was introduced in February that traffic levels have fallen by around 40%, the mayor's office said.

But the lack of drivers paying £5 to enter the zone means Transport for London's budget for the scheme will be £65m short by the end of the financial year, according to the mayor's latest estimates.

During a meeting of the London assembly's budget committee, Mr Livingstone and TfL bosses acknowledged that the net income generated by the charge would be only half the £130m planned.

Sally Hamwee, the Liberal Democrat who chairs the assembly, said she was concerned the mayor seemed to have no rescue plan.

"This is a substantial shortfall and I am quite alarmed," she said.

"The things that get cut in these situations are things that are less high profile, like road safety provision for pedestrians and cyclists."

There was already a forecast £563m "black hole" in TfL's finances for 2005-6, she said.

A spokesman for the mayor said this year's spending plans would not be affected by the predicted shortfall.

"It is still early days for the congestion charge but the scheme was always designed to reduce congestion and not raise revenue," he said. It is working very well and congestion in central London has been cut by some 40%.

"But as a direct consequence of the scheme's success, we are likely to be slightly below our original estimates of how much we might make from it."