Local authorities in seven areas were yesterday awarded £7 million to develop a model charging scheme that will be rolled out over the entire road network in the next 10-15 years.

The authorities will study new technology that can target motorists who travel at the busiest times, charging them up to £1.34 a mile.

They will also consider new taxes on workplace parking spaces to deter people from driving to work. Parking meter charges will increase sharply and thousands of bays will be converted from long-stay to short-stay.

Alistair Darling, the Transport Secretary, made clear that the new charging schemes would be much more sophisticated than the £8 daily toll in Central London. He believes that Ken Livingstone’s scheme is too crude because it is based on a flat rate that fails to take account of distance travelled or the amount of congestion.

Mr Darling wants towns and cities outside London to test electronic tagging and satellite tracking systems that allow charges to be directly related to the level of traffic on the roads.

The seven areas taking part in the studies are Greater Manchester, West Midlands, Tyne & Wear, Cambridgeshire, Durham, Shrewsbury and a coalition of authorities around Bristol and Bath.

Mr Darling said that the studies would not necessarily result in charging schemes in every city involved. But he said that the first scheme would be announced within 18 months and one or two areas would start charging drivers by 2008 or 2009.

These schemes would allow the technology to be tested before it was adopted by other areas.

The Government has allocated up to £200 million a year from 2008 to help local authorities introduce charging systems. Participating councils will also be given greater control over local bus services in a move that is likely to anger private bus companies.

Mr Darling said: “If you tell people the city is too congested for their cars, you have to offer them a proper bus service.

“It’s inconceivable to me that we will not give (councils) additional controls so buses can be coordinated with everything else.”

Several councils taking part in the studies had been lukewarm about the idea of congestion charging until Mr Darling assured them that they would receive extra funding for public transport. Manchester hopes that Mr Darling will unblock funding for extensions to its tram network in return for its cooperation in testing congestion charging.

The city plans to work with Norwich Union, which has launched a “pay-as-you-drive” insurance policy under which 5,000 customers’ cars are tracked by satellite. The same system could also be used to charge tolls that vary according to distance and time.

The West Midlands also favours a system of flexible tolls but voiced concerned that regions could lose trade to their neighbours if they made driving more expensive.

A third of small businesses in London say that they have considered relocating out of the congestion charge zone because profits have slumped. However, it has had some success in reducing traffic levels with statistics showing that the number of miles travelled by cars in London has decreased by about 1.5 per cent since its introduction in February 2003.

Tyne & Wear is considering using profits from its proposed charging scheme to compensate businesses for loss of trade.

It is also studying whether to use some of the revenue to give a council tax rebate to city centre residents to compensate for traffic pollution.

Cambridge is proposing a charge that would be “fiscally neutral” for the average motorist, who would receive “credits” for public transport equal to the sum paid in tolls. But high-mileage drivers would pay more than they do now.

Mr Darling said that a national charging scheme would replace either fuel duty or vehicle excise duty but could result in an increase in the overall sum paid by motorists. He had previously suggested that a national scheme would be revenue neutral.

“It is impossible to predict what the tax regime is going to be 2015,” he said. “But I’m convinced that without more radical measures road congestion will get worse.

“Local and regional pilots are essential if we are to explore and understand the possibilities of road pricing at national level.”