A new diesel car scrappage scheme will be targeted at the most polluted areas under plans being considered by ministers, The Telegraph can disclose.
Car owners will only be able to qualify for cash to scrap their diesel vehicles if they are old enough and registered at an address where air pollution is already at dangerous levels.
Ministers are hoping that this “postcode” diesel scrappage scheme will be cheaper than a general scheme open to all owners of diesel cars.
They also do not want to “demonise diesel drivers”, one source said, adding: “Older diesel cars are disproportionately driven by those who are less well off.”
Uptake of diesel cars rocketed over the past decade, after they were taxed less than petrol cars, with the proportion of diesel vehicles on British roads increased from 20 per cent in 2005 to 37.8 per cent in 2015.
This was a deliberate policy because diesel cars emitted less carbon dioxide. However it ignored their nitrogen dioxide emissions which cause or worsen health conditions like asthma and bronchitis. Last year four in 10 local authorities breached legal NO2 limits.
Ministers have now been given until April 24 to publish court-mandated new plans for tackling illegal levels of air pollution.
They are expected to unveil plans for new clean air zones and extra charges to enter some towns and cities in peak periods.
Number 10 has pushed back against calls for a national scrappage scheme for polluting diesel vehicles on cost grounds despite it being backed by Transport secretary Chris Grayling in February.
But Tory MPs will push the Government to commit to a targeted scheme in the House of Commons debate on Wednesday next week.
Neil Parish, Conservative chairman of the Environment, Food and Rural Affairs select committee, will say: “I know there are concerns about the costs of any scheme.
“That’s why any proposed scheme should be targeted and proportionate. It should be a key weapon in the armoury of the Government in tackling air pollution problems.”
He will say the scheme could be limited to the 5.6million diesel cars which were registered before 2005 and "geographically" targeted in "pollution hot spots".
He will say: “Limiting the scheme to these hotspots could potentially take as many as half of these dirtiest diesels out of these pollution hotspots.”
Scrappage schemes have proved to be very popular with seven in 10 AA members supporting the policy.
A previous scheme in 2009/10 allowed a vehicle to be scrapped for a £2,000 discount on a new car - £1,000 from the manufacturer and £1,000 from the Government.
Mr Parish will propose that the new scheme follows the same rules but should be means-tested so that it did not become “a subsidy of the middle class”.
He will say: “Households should not just be able to trade in multiple diesels for a cash subsidy.
“Instead the Government should particularly consider targeting a scrappage scheme at poorer households or those earning less than 60 per cent of the median UK household income.”
He will say: “If the Government ear-marked £500million for this scheme, it would take nearly 10 per cent of the five million dirtiest diesels off our roads.”
Families would have to swap their polluting cars for low emission-producing vehicles, public transport tickets, a car club membership or even a new bicycle, he will suggest.
A similar Pollution Reduction Vouchers Scheme in southern California has proved to be popular, he will say.
In February, Mr Grayling said: “People should take a long, hard think about what they need, about where they’re going to be driving and should make best endeavours to buy the least polluting vehicle they can.
“I don’t think diesel is going to disappear but someone who is buying a car to drive around a busy city may think about buying a low-emission vehicle rather than a diesel.”
Anna Jones, Head of Greenpeace’s Clean Air Campaign, welcomed the idea, saying: "A really progressive scrappage scheme will help kick start the shift to electric vehicles, as well encourage a shift to car sharing and public transport.
"Even the newest diesel cars are heavily polluting, and the majority aren’t meeting pollution standards. So they shouldn’t be promoted by government as a clean option in any scrappage scheme.
"To sort out this health crisis, we need to remove all diesel from our roads and transition to full electric.”
But Oliver Hayes, air pollution campaigner at Friends of the Earth, said the scrappage scheme did not go far enough.
He said: "Neither tax payers nor drivers should pay for clearing up the mess created by car makers who lobbied hard for diesel incentives and then sold us vehicles totally incapable of delivering the claimed cuts to emissions.
"Targeting scrappage schemes only at the worst polluting areas somewhat overlooks the fact that 9 out of 10 air quality zones are breaking legal limits for toxic NOx emissions.
“Britain needs full-blooded policy to address its air pollution crisis, not a half-baked post code lottery."