The state assembly had until midnight to ratify the measure put forward by New York Mayor Michael Bloomberg and approved by the city council, but ducked the proposal, deciding not even to put the issue to a vote.

The plan would have involved an eight-dollar charge for cars and 21 dollars for trucks entering the busiest parts of Manhattan on weekdays and had faced stiff opposition particularly at the state level.

The decision means the city will lose more than 350 million dollars in federal funding earmarked for mass transit and leaves the plan facing an uncertain future, to say the least, with Bloomberg apparently admitting defeat.

"Today is a sad day for New Yorkers and a sad day for New York City," the mayor said in a statement late Monday.

"Not only won't we see the realization of a plan that would have cut traffic, spurred our economy, reduced pollution and improved public health, we will also lose out on nearly 500 million dollars annually for mass transit improvements and 354 million dollars in immediate federal funds.

"It takes true leadership and courage to embrace new concepts and ideas and to be willing to try something. Unfortunately, both are lacking in the assembly today," he added.

Congestion charging was first put forward by Bloomberg last year in a bid to reduce gridlock in the city and improve air quality, modelled largely on similar schemes in cities such as London, Singapore and Stockholm.

Bloomberg's plan had several times met with resistance among state lawmakers, who last year established a committee to study the congestion charge and look into other ways to reduce traffic on the city's bustling streets.

Officials from neighboring New Jersey had also expressed opposition to the proposals, while many drivers saw it as a tax on motorists.

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