Transport Secretary Alistair Darling has given the go-ahead for the scheme to charge motorists using the narrow streets of Durham's busy town centre, based on a peninsula, accessed via a single road.
The county council will introduce a levy of £2, using a rising bollard and payment/ticketing machine. A fine of £30 will be introduced for non-payment.
About 3,000 vehicles a day use the sole access road to the World Heritage Site, which includes Durham Cathedral and Castle, which is only wide enough for one vehicle at a time and is shared with up to 17,000 pedestrians a day.
The council claims the charge, which operates from 10am to 4pm on Monday to Saturday, should cut traffic levels by half. It will use funds from the charge to pay for extra bus services and is creating several park and ride schemes.
There will be exemptions for residents and their visitors, motorcyclists and cyclists, disabled people with arranged parking places and people going to places that have off-street parking, but other essential vehicle users, such as delivery firms, will have to pay the toll if they enter during charging hours.
Implementation of the scheme, which took five years, has been overseen by a partnership involving representatives of Durham Cathedral, Durham University, the City's Chamber of Trade and members of the county and city councils.
By 2010 fleets will be contributing heavily to an estimated annual congestion charging bill of £1.2 billion according to Government predictions. It anticipates that eight cities will have road-user charging schemes in place and 12 cities will adopt workplace parking charges within this timeframe.
The mammoth London scheme is set to go live next year, but Birmingham, Bristol, Derby, Leeds and Leicester are likely to follow with some form of charging. Currently, 36 out of 150 local authorities are looking at schemes.