The package is dependent upon New York state lawmakers approving either a congestion charge as outlined by Mayor Michael Bloomberg earlier this year or a similar mechanism to reduce gridlock in the city and improve air quality.

“We’ve worked very hard to secure these funds, and this is a major victory for the people of New York City,” Bloomberg said in a statement.

“By fulfilling the terms of the agreement, we will be able to create new and better mass transit options for commuters all across the city before congestion pricing takes effect,” he added.

Bloomberg’s plan had met with resistance among state lawmakers, who earlier this year agreed to establish a commission to study the congestion charge and look into other ways to reduce traffic on the city’s bustling streets.

The commission’s recommendations will still require state approval.

Bloomberg first put forward the congestion plan in April as part of an ambitious raft of environmental proposals. The scheme is based on similar charging schemes that have proved successful in cities such as London.

If introduced, the plan would see motorists paying eight dollars to drive a car and US$21 to take a truck into parts of Manhattan on week days.

Under the deal unveiled by the Department of Transportation on Tuesday, the city’s subway and bus operator would receive almost US$200 million to improve mass transit and upgrade facilities such as park-and-ride services.

“Congestion pricing holds immense promise for the future of New York City,” New York Governor Eliot Spitzer said in a statement.

“It has the potential to mitigate the city’s severe congestion and its associated economic costs while also improving public health by reducing harmful pollutants,” he added.

“The funding provided by the Federal Department of Transportation represents a down payment on a healthier, more environmentally friendly New York.”

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