The congestion charge in central London is set to rise from £8 to £10-a-day from January 2011, Mayor Boris Johnson has announced.
However, the mayor also plans to scrap the western extension of the congestion charge area by Christmas Eve.
The charging zone would then revert to substantially the same area that existed before the western extension was introduced in February 2007.
"West London never wanted the western extension," Mr Johnson said.
"It is right that residents there can now tell us whether this Christmas should see the end of it."
The consultation period public for Mr Johnson's plans will end in August.
Under proposals, from 4 January 2011, drivers entering the reduced size zone between 0700 and 1800 would pay the £10 flat rate on the day of travel, or £12 the day after they travelled.
The mayor also proposed an auto pay scheme which aims to make paying the charge more convenient.
Auto pay customers would need to pay a £10 registration charge for each vehicle on the account and would be eligible for a daily charge of £9.
Labour London Assembly member Val Shawcross, has described the halving of London's congestion charge zone as a "big mistake".
"It's hard to see who wins from this," she said.
"Cyclists, bus users and local residents will all suffer from more congested roads and dirtier air while Transport for London will throw away millions in valuable revenue at a time of financial hardship."
Green Party London Assembly member Jenny Jones said: "Increasing the charge to £10 raises relatively little money and does not compensate for the loss of between £55m and £70m in funding from the western extension."
Liberal Democrat London Assembly member Caroline Pidgeon welcomed plans to remove the western extension of the zone.
The congestion charge was introduced in February 2003, with drivers initially paying £5 a day.