London should charge motorists around 20p per kilometre for driving on London's roads to help improve the air quality and reduce traffic congestion, according to a report commissioned by the Green party on the London assembly.

The pay as you go road pricing scheme would cover the whole of the Greater London area and replace the congestion charge which currently covers inner London.

It would reduce traffic by about 10% and raise about £3.9m a day - £1.4bn a year - according to the report drawn up by Professor John Whitelegg.

The report said further investigation and debate would be needed before making decisions about what time of day and what roads to charge for, the level of charge and which vehicles would be exempt.

Darren Johnson, a Green party member of the London assembly, commissioned the report. He said: "Congestion charging has served London well, but we need to make full use of emerging technologies to deliver a more flexible approach to road pricing which really targets the problems that Londoners face.

"We have to tackle congestion which is bad for our economy and the air pollution which is bad for our health. I believe this report offers groundbreaking solutions and provides a firm basis for a grown-up public debate on the issue."

The report, which will be sent to Boris Johnson, the London mayor, said there was a range of modern technologies that could be used, based upon "greater levels of automation and satellite communications".

Concerns about fairness, social justice and the impact on small traders would all need to be addressed.

The report said: "Put in very clear language it is our view that a London-wide road pricing scheme is essential and without it congestion will worsen and air pollution will worsen.

"The legal consequences of failing to meet air quality standards will grow in severity, the health of Londoners will suffer, CO2 reduction targets will be missed and London will stand no chance whatsoever of achieving 'best in class' status that it so richly deserves."

It added: "If this scenario unfolds in this way, the consequences will be more severe still because competitor cities are not marking time. They are racing ahead.

"Almost every major European city is already achieving the success that London may find elusive and the gap will widen and London will slip further down the rankings at an accelerating pace with unwelcome consequences for jobs and inward investment."

Transport for London responded by saying that there were currently "no plans" to introduce a London-wide road user charging scheme.

Michele Dix, Tfl managing director of planning, said: "The proposal has been included in the mayor's transport strategy so that if the raft of other measures to address congestion, including a huge investment in London's transport network, the lane rental scheme and other measures to increase transport capacity across the capital, are unsuccessful then a larger-scale system of road-user charging could at that time be considered. However, this would be very much the last resort, and very much in the long term."