Pay-as-you go road charging could be trialled within five years, says Transport Secretary Alistair Darling.
Mr Darling hopes that road charging could reduce congestion
The pilot scheme is likely to cover a large conurbation or region, he said. If it is a success a nationwide scheme could be in place as early as 2015.
Satellite tracking would be used with charges varying from 2p a mile on rural roads to £1.30 in congested areas.
Mr Darling said charging could replace road tax and fuel duty. It would leave half of motorists better off, he said.
Mr Darling explained details of his proposals in a speech to the Social Market Foundation in London on Thursday.
No more space?
The transport secretary says that his plans, which are unlikely to become a national reality before 2015-2020, are an attempt to prevent Britain's roads reaching "gridlock".
Mr Darling said he needed to build a consensus for such radical proposals and he acknowledged that road pricing was not an "easy option".
But he argued that "future generations would curse us" if politicians failed to live up the challenges of keeping traffic moving in such a "crowded island".
There was not enough space to simply build more roads, he said.
"Road pricing is not an easy option - there will be hard choices and difficulties along the way. But we need to face up to all this now," he said.
The plans have divided opinion.
Motorists' groups have reacted angrily to the proposals, and a Mori survey suggests 16% of drivers would refuse to have tracking devices fitted in their cars to allow the introduction of road-charging.
The survey suggested 34% of respondents opposed the introduction of charges for driving on congested roads at peak times, compared with 47% who supported the measure.
BBC Environment Correspondent Richard Black said opposition from motorists' groups could be an obstacle to Mr Darling's plans. Making the technology work could be another.
Bert Morris, director of the AA Motoring Trust, told BBC News: "The real issue is going to be public acceptance, trust in the government to keep its word over revenue neutrality and actually scrapping fuel tax and road taxes."
There was "a lot to play for", he said.
"The public have to decide whether they are better off or worse off and politicians I think will respond to the public's will," he added.
Steven Joseph, director of the pressure group Transport 2000 backed road charging but argued many big questions had yet to be resolved.
"Will motoring tax overall rise to encourage people onto public transport? Will traffic be displaced from key arteries onto unsuitable local roads? How can we use the system to stop traffic growing? Will charges be varied according to the 'pollutability' of vehicles? Will it help us reduce carbon emissions?" he asked.
Mr Joseph called for the mileage rate for "gas guzzlers" to be twice or three times that levied on greener vehicles.
The Mori survey was carried out for IT consultancy Detica.
Detica's head of transport Grant Klein said the poll suggested Mr Darling might overcome public resistance if his scheme combined tracking technology with services attractive to motorists.
Mori conducted the survey by interviewing 1,075 British adults between 19 and 23 May - before Mr Darling announced the latest details of his proposals.