Plans to impose London-style congestion charging schemes in Birmingham and the West Midlands have been dropped in favour of a regional pay-as-you go road pricing project.
Drivers would be charged a levy depending on the time, length and destination of their journey, if proposals being worked up by council leaders get Government backing.
The system, probably based on satellite tracking of vehicles, would be flexible enough to take account of local traffic patterns and avoid a blunt one-size-fits-all approach to tackling congestion.
The idea is the latest thinking to emerge from the seven West Midlands district councils and passenger transport authority Centro, following the publication last September of the Gridlock or Growth green paper.
The document warned that congestion on major roads and motorways already costs the regional economy £2.2 billion a year and is set to increase by 22 per cent over the next 15 years.
An application for money from the Government's Transport Innovation Fund to pay for a congestion charging experiment could be submitted later this year.
Centro chief executive Geoff Inskip, writing in The Birmingham Post today, warns that any road pricing experiment would have to be accompanied by significant improvement in public transport and must also be backed by the public.
Mr Inskip said economic revival and regeneration in the West Midlands would be hampered if traffic congestion could not be reduced.
He added: "Our approach has been not to take decisions in isolation, but to take this work forward with the input of local people.
"We're in ongoing dialogue with local business representatives, environmental groups and some of the region's leading attractions about our plans for tackling congestion.
"There's widespread agreement that a fresh approach which addresses congestion and provides attractive, integrated alternatives to the car is urgently needed.
"What is clear from this dialogue is that a package of measures is required which has to include significant investment in our transport system, and particularly public transport.
"A significant shift from the car, to bus, tram or train will only be achieved if there are realistic alternatives."
Mr Inskip said it had become clear after talking to residents and business leaders that congestion charge zones of the type used in London would not be right for Birmingham and the West Midlands.
Anything that placed zones across the region risked creating artificial barriers that could divide communities, he said. Road pricing had to take account of the time of travel and the distance covered to be seen as fair.
The councils and Centro are only likely proceed if they can come up with a scheme "flexible enough to fit different needs, in different places and at different times", he said.
The Centro chief executive said he accepted the concerns of the business community that road pricing would only be acceptable if it enhanced the region's competitiveness.
Mr Inskip's remarks were timed to coincide with today's The Birmingham Post and NEC Group Big Debate at the ICC on congestion charging, which will see more than 100 politicians, business leaders and experts debate the merits of road pricing.
The road pricing issue is further highlighted today with the release of a report by the influential Institute for Public Policy thinktank, which warns that Britain's economic prosperity is at risk unless transport links are improved.
The report, Connecting Cities, says the debate about congestion charging has become stalled because of a lack of information about how systems would work.
There is unlikely to be much in the way of public support for road pricing until the Government explains how it would provide funding to improve public transport, the report adds.
The IPPR, a centre-left organisation with links to the Labour Party, is also urging the Government to allow cities such as Birmingham to levy a supplementary business rate in order to pay for transport improvements.
A 2p levy in Birmingham would raise £15.4 million a year and support a ten-year loan of about £118 million. The additional money could be used to deliver major infrastructure projects including the redevelopment of New Street Station.