Diesel car owners in London should be paid up to £3,500 to scrap their old diesel vehicles, according to the Mayor of London, Sadiq Khan.

Air quality in the capital has deteriorated dramatically in recent years, a key contributor to which is believed to be nitrogen oxide – a pollutant emitted by diesel engines.

City Hall has even advised people to stay indoors during the worst affected periods.

The scheme, which may cost as much as £500m, would include a range of incentives for businesses and low-income households to ditch their diesel vehicles.

The mayor said he also wants the Vehicle Excise Duty to be redesigned so that it no longer encourages people to buy diesel cars.

“The toxic state of our air leaves us with no choice but to rid our city of the most polluting diesel vehicles. It is shocking that nearly half of new car sales in the UK are still diesel vehicles and the national system of vehicle excise duty still incentivises motorists to buy these polluting cars,” Khan said.

Khan also said that the proposed scrappage scheme "fairly compensates" diesel owners and will help "clean up our filthy air".

Government estimates suggest 50,000 people die from air pollution every year – costing £27.5bn annually.

Current incentives – designed to increase take-up of diesel cars – were drawn up when petrol cars were believed to be the most dangerous pollutant, particularly as regards global warming.

Under Kahn's proposals, van drivers would be offered £3,500 towards a less polluting model, while low-income households would be offered a credit valued at £2,000, which they would be able to spend on alternative transport options, including car share schemes.