London's Ultra Low Emission Zone (Ulez), backed up by daily charges for polluting vehicles, is to be expanded to the whole of the capital.

The move could come into effect by the end of next year with a fee of £12.50 a day for older polluting vehicles, which account for around one in five of those on the road.

The scope of the ULEZ was expanded to the boundaries of the North and South circular last October, bringing in parts of Kew, the Townmead dump and the Mortlake Crematorium.

That decision proved highly controversial, however it is now clear this was just a stepping stone to a 'big bang' shift to apply ULEZ out to the boundary of the M25.

The proposals are likely to be a political hot potato ahead of the council elections in May.

Analysis by the PA news agency found that more than 3.5 million more people will live within the ULEZ if it is expanded as planned. The mayor's office estimated that an additional 135,000 vehicles would be affected per day.

The daily charge of £12.50 is backed up by fines for non-payment, which can reach £160.

Mr Khan said the move, which will generate hundreds of millions of pounds a year in income from charges and fines, is designed to save lives and protect the health of Londoners.

"I believe the proposal to extend the Ulez London-wide will have the biggest effect on emissions and congestion relative to the potential financial impact on Londoners as a whole," he said.

The mayor is proposing a scrappage scheme to help Londoners on low incomes, the disabled and businesses switch to greener vehicles.

Mr Khan said extending the ULEZ to the South Circular was not sufficient to improve air quality and cut congestion. He added there is 'still far too much toxic air pollution permanently damaging the lungs of young Londoners and leading to thousands of deaths every year'.

The mayor will not go ahead with a proposal to charge drivers of all vehicles registered outside London for entering the capital.

He has also asked TfL to explore how motorists can be charged on a per mile basis depending on how polluting their vehicles are, the level of congestion in the area and access to public transport. However, the technology to allow this does not yet exist.

The Federation of Small Businesses said the proposals are a 'great cause for concern' as many cannot afford to replace older vehicles.