CONGESTION charges for North-East cities moved a significant step closer yesterday with the announcement that the Government would fund feasibility studies into two schemes.

Transport Secretary Alistair Darling announced a £350,000 award to investigate the possibility of further road pricing in Durham City - where the country's first congestion charge was introduced - and £950,000 for a study into a similar scheme covering Tyne and Wear.

The projects are among seven nationwide awarded 50 per cent funding from the Transport Innovation Fund.

The news received a mixed response in Durham City, which pioneered the new wave of congestion charging in 2002, with the introduction of a £2 toll to use the Saddler Street route to the city's castle and cathedral.

On Saturday, its £10m park-and-ride scheme comes into operation, with shuttle buses from three car park sites ringing the city.

These, combined with higher city centre parking charges, are designed to cut traffic entering the historic city centre.

Durham County Council has applied to the Transport Innovation Fund to part pay for a £600,000 two-year study to test the viability of a package of measures.

Chief among them is extending the congestion charge - either by a toll on the busy A690 over Millburngate Bridge and through the city centre while diverting traffic on to other routes - specifically the controversial Northern Relief Road - or by creating a wider congestion charge cordon.

Durham County Council leader Ken Manton said: "The Government has recognised that we are willing and able to successfully tackle those problems, by introducing radical and innovative solutions such as congestion charging."

But Sarah Green, North-East regional director of the Confederation of British Industry, said: "Road pricing has a role to play but must be integrated with other policies, including public transport and planning."

George Cowcher, chief executive of the North East Chamber of Commerce, warned: "Businesses will find it more difficult to compete if other major cities in England and Wales do not play their part in revenue-raising congestion schemes."