By Simon Montague BBC transport correspondent

It has announced plans for a new charging system for all lorries using the UK road network, based on the distance they cover.

It will be introduced in 2005 or 2006.

It means nearly half a million UK registered trucks will need to be fitted with electronic "black boxes", which are monitored by satellite technology to measure the distances travelled.

UK hauliers gain competitive edge

All foreign registered lorries entering the UK will also have to be fitted with the electronic transmitters.

The chancellor has promised that UK hauliers will not pay more in tax overall, which means they will receive offsetting tax reductions, probably in the form of lower vehicle excise duty, or duty on diesel fuel.

The result is that British hauliers will become more competitive with the increasing number of foreign lorries on UK roads.

Overseas hauliers will now have to pay more to drive here.

Charging how far we drive

The distance based charging scheme for lorries is being seen as a prototype model for introducing universal charging for all vehicles on UK roads.

The Commission for Integrated Transport, a government advisory body, and other transport experts, economists and environmentalists, are increasingly arguing that charging for how far, and when, we drive is the only way to reduce road congestion in the long term.

Gordon Brown's Budget marks an important step in that direction.