London’s ultra-low emission zone will be extended to the whole of Greater London by the end of next year under plans set out by the mayor, Sadiq Khan.

City Hall said “bold measures are required” to reduce toxic air pollution and cut congestion in the capital, as well as tackling the wider climate emergency.

Khan has ruled out a proposed £3.50 boundary charge for motorists to enter Greater London, as well as a daily clean air charge, to apply to all except zero-emission vehicles.

The two alternatives were under consideration to raise revenue for Transport for London (TfL), before the latest round of emergency funding from the government.

Instead, the mayor has instructed TfL to consult on expanding the ultra-low emission zone (Ulez) from the inner boroughs to the whole of London.

The Ulez, in which drivers of all but the newest diesel vehicles, and some older petrol vehicles, are liable to pay £12.50 daily for cars, and more for larger vehicles, was expanded to the north and south circular roads last October.

City Hall said toxic air caused by traffic was leading to stunted lung growth in children and almost 4,000 premature deaths a year – mainly in London’s outer boroughs. It has found that all of London’s hospitals, medical centres and care homes are in areas that breach the World Health Organization’s guidelines for nitrogen dioxide and particulate matter.

The expanded Ulez would cut the number of the most polluting cars on London’s roads by a further 20,000-40,000 daily. Khan said he would help charities, small businesses and vulnerable Londoners to adapt with a scrappage scheme.

The mayor said: “The triple challenges of tackling toxic air pollution, the climate emergency and congestion mean we need to further reduce emissions from vehicles in London. We simply don’t have time to waste.

“This is also a matter of social justice – with air pollution hitting the poorest communities the hardest. Nearly half of Londoners don’t own a car but they are disproportionally feeling the damaging consequences polluting vehicles are causing.

“We have too often seen measures delayed around the world because it’s viewed as being too hard or politically inconvenient but I’m not willing to put off action we have the ability to implement here in London.”

With other research putting the cost of congestion in London at £5.1bn last year, Khan said the fairest long-term solution would be smart road-user charging – but said TfL was years away from being able to run such a scheme.

Road charging has long been seen as politically toxic, after a huge public backlash to national plans introduced by Labour in 2007, but recently the cross-party transport committee and others backed the principle to replace fuel duty as drivers transition to electric cars.

• This article was amended on 5 March 2022. The Ulez charge for cars is £12.50, not £15.50 as an earlier version said.