A controversial scheme to ease traffic congestion by charging utility companies "rent" when they dig up roads was given the green light by the high court yesterday.

Telecommunications, water gas, and electricity companies could face bills of millions of pounds each year if two pilot projects are extended across the country.

Middlesbrough council and the London borough of Camden have charges contractors a "lane rental" fee of up to £1,000 a day for roadworks. They must then spend the cash on traffic improvements.

Under the Department of Transport's experiment companies can be charged whether or not they are to blame.

BT, which received a bill from Camden for £12,100, argued in the high court that the street works regulations were unlawful and "created a tax for occupying the highway".

Declaring the regulations valid, however, Mr Justice Bell said the "sole motive" in imposing the charges was the "minimisation of disruption".

The pilot projects were introduced in April to help tackle congestion created by the 200 companies which dig up roads.

Camden was chosen for the pilot after its High Street was dug up on 144 separate occasions in a year. A Camden council spokesman said the ruling would encourage better coordinated repairs.

BT said it may appeal, while Water UK, the body which represents the water industry, said that extra costs would be passed on to customers.