A fares hike of the RPI rate of inflation plus one per cent is also likely from January, adding about five per cent to the cost of Tube, bus and London Overground travel.
Free travel for Londoners aged 60 and older will be restricted, with age eligibility for the 60+ Oyster card increasing by six months each year, for the next 12 years, under the proposals.
Mr Khan said he had been forced to make the proposals as the Government was “holding London to ransom” by failing to fund TfL.
Households already pay an average of £363 a year to City Hall and Mr Khan’s announcement did not rule out further hikes, for example to provide extra funds for the Metropolitan police. Adding £20 a year to Band D bills should raise £172m a year for TfL.
Mr Khan said he was withdrawing from the Travelcard scheme, which is used by National Rail commuters to travel on the Tube and buses.
Clarification was awaited from City Hall but it appears that passengers will have to switch to the Pay As You Go system, using Contactless bank cards or Oyster cards. It appears that “paper” Travelcards will be scrapped.
Tube journeys on the Piccadilly line between Zone 1 and Heathrow airport will be charged at premium rates throughout the day. Crossrail fares will also include a Heathrow premium.
Daily and weekly price caps will remain in place to help limit costs for airport workers.
Mr Khan hopes the changes to the fares structure will raise £60m to £80m a year.
The deposit on an Oyster card will increase from £5 to £7.
All the proposals will be consulted upon before being introduced. New fares normally start in January while council tax increase from April.
The proposals were announced in Mr Khan’s latest bid to secure a long-term funding deal from the Government for TfL.
The current bailout, the third since the start of the pandemic, runs out on Friday after being extended for a week by Transport Secretary Grant Shapps, who said more time was needed to consider the Mayor’s money-raising proposals.
TfL is required to become self-sufficient from April 2023, and has been told to generate an extra £500m to £1bn a year in income.
TfL wants £500m for the remainder of this financial year, £1.1bn for 2022/23 and £400m to £500m for the two subsequent financial years, plus agreements on long-term capital funding to maintain and upgrade the capital’s transport network.
The Government has already given TfL more than £4bn to keep services running after passenger numbers collapsed – with the latest work from home rules sending morning rush hour Tube journeys below 50 per cent of normal levels this week.
Mr Khan said: “The sole cause of TfL’s financial problems is Covid-19 and, with the emergence of the Omicron variant and the new guidance to work from home, it’s never been more urgent for the Government to agree a fair, sustainable, long-term funding deal for TfL – for the benefit of our capital city and the whole country.
“The Government is still refusing to properly fund TfL and Ministers are effectively holding London to ransom, threatening to withhold all emergency funding unless even more significant additional revenue is raised from Londoners for TfL.
“This means that in order to help save TfL from collapse and to safeguard London’s economy, we have been left with no alternative but to plan to increase council tax in London by around £20 a year over the next three years. This is not something I want to do, but we’re being forced down this route by the Government’s refusal to properly support TfL or to enable us to raise additional revenue fairly by devolving powers.”
Mr Khan has been forced to come up with the proposals after the Government refused to hand the £500m a year paid by London motorists in VED car tax back to City Hall.
It also refused to back a Greater London boundary charge or to allow the Mayor to impose a new levy on online delivery drivers.
A Department for Transport spokesperson said: “We have repeatedly shown our commitment to supporting London’s transport network through the pandemic, providing more than £4bn in emergency funding to Transport for London.
“We received a response from the Mayor on income generation proposals which can move TfL towards a financially sustainable future, in a way that is fair to the national taxpayer.
“As this response was received three weeks late, we agreed to extend the current funding package for one week to seek further clarity from the Mayor.
“We have now received a further response from the Mayor which we will consider and respond to in due course.”
Mr Khan said that even with the new sources of revenue, TfL would still have to make significant cuts to bus and Tube services, planning on the basis of “managed decline”.
Sarah Olney, Liberal Democrat transport spokesperson and MP for Richmond Park, said: "This is a complete mess. The last thing Londoners needed was more tax rises because their politicians can’t get their act together.
"It should never have come to this. In one of the most expensive cities in the world to live in, people expect and deserve well-funded local transport services. This political row is now unfairly hitting the pockets of ordinary Londoners."
Nick Bowes, chief executive at the Centre for London thinktank, said: “It seems the really big fundamental questions about the long-term funding of TfL remain unanswered as the negotiations between City Hall and the Government come down to the wire."