Porsche is to mount a legal challenge to Ken Livingstone's decision to raise the London congestion charge from £8 to £25 for the highest-polluting vehicles.

The luxury car company said it believed that the increase was unfair and wouldn't actually help the environment.

It plans to write to the Mayor of London this week giving him 14 days to respond before it applies for a judicial review.

“A massive congestion charge increase is quite simply unjust," said Andy Goss, managing director of Porsche Cars GB.

"Thousands of car owners driving a huge range of cars will be hit by a disproportionate tax which is clear will have a very limited effect on CO2 emissions."

Mr Goss claimed that the higher rate of tax on large vehicles will damage London based-businesses and put off rich non-domiciled entrepreneurs from settling in London.

"Successful people from across the world will start to think twice about basing themselves here if they think they are going to be used as cash cows for City Hall," he said.

“The proposed increase will be bad for London as a whole and will send out the signal that it is not serious about establishing itself as the best place in the world to do business.”

From October 27, all vehicles emitting more than 225 grams of carbon dioxide per one kilometre will see their congestion charge rise to £25 a day, as will those registered before March 2001 which have engines larger than 3,000cc.

At the other end of the scale, vehicles emitting less than 120g/km will no longer have to pay to enter central London at all.

The changes mean that 17 per cent of the cars currently being driven in the charge zone would be liable for the £25 charge, while a mere two per cent would qualify for the total discount.

A spokesman for Mr Livingstone hit back, claiming: “Porsche’s threatened legal action is a double attack on Londoners.