Croydon Council is not joining five other London councils taking legal action against the Ulez expansion - because, it says, it cannot afford to.
The local authority was left £1.6 billion in debt when Labour lost power last May.
The bankrupt council has for months opposed the Ultra Low Emission Zone expansion to outer London boroughs, which the Mayor of London and Transport for London (TfL) aims to roll out by August.
Under the scheme drivers with cars that do not meet the emission standard have to pay £12.50 a day to drive within the Ulez zone.
Sadiq Khan believes expanding the scheme will improve deadly air pollution in the capital.
But, similarly to councils taking legal action, Croydon Mayor Jason Perry has claimed the fines will disproportionately hit low income and less mobile residents amid a cost of living crisis.
“The council does not dispute the need to drastically improve air quality in the capital but maintains that this could be better achieved through improving infrastructure for public and more sustainable methods of transport,” he wrote in August.
While other opposing councils are launching a judicial review into the decision making process behind the expansion, Croydon Council is sitting out.
Mr Perry told MyLondon that the council is “supporting the other London boroughs, but because of our financial situation we cannot commit to financing a judicial review at this time.”
Croydon issued its third bankruptcy notice in just two years in November after admitting it would not be able to balance the books without a Government bailout.
Earlier this month it was given special permission by the government to increase council tax by a “staggering” record amount of 15 per cent - 10 per cent more than most other local authorities.
Mayor Perry has long blamed the borough’s debt levels on “Croydon Labour’s toxic financial mistakes”.
He said it is “strongly in the public interest” for the Penn report into the council’s historic mismanagement to be published publicly.
Mr Perry wrote on Twitter on Thursday: “I am committed to ensuring those responsible for Croydon’s financial collapse are held to account.”
The London boroughs of Bexley, Bromley, Harrow and Hillingdon and Surrey County Council announced on Thursday that they have brought legal action against the Mayor of London and TfL.
The coalition is challenging the Ulez expansion in the High Court on five grounds, claiming that TfL failed to compy with statutory requirements or consider compliance rates in outer London.
The group of councils also claimed that the proposed “scrappage scheme” was not consulted on, and no cost benefit analysis was carried out. It claimed there was “inadequate consultation”.
But a spokesperson for the Mayor of London said neither the Greater London Authority nor TfL had yet been served with the legal claim.
“We will be defending any challenge to this vital scheme,” the spokesperson said.
“Around 4,000 Londoners die prematurely every year due to air pollution. The Mayor is determined to protect the lives of Londoners who are growing up with stunted lungs and more at risk of heart disease, cancer and dementia due to our toxic air.
“The Mayor urges the councils involved to abandon this costly and unnecessary legal challenge and instead focus on the health of those they represent.”
The Ulez is currently limited to the area within London’s North and South Circular roads, but is due to be extended to cover the whole of the capital from August 29.
It will then border areas of Buckinghamshire, Essex, Hertfordshire, Kent and Surrey.
Croydon Council has been approached for comment.
