New York, New York - A judge on Wednesday renewed hope for New York's congestion pricing program by blocking President Donald Trump's attempts to withhold project funding if the policy goes ahead.

US district judge Lewis Liman on Wednesday issued a temporary restraining order blocking the US Department of Transportation from withholding federal funding and approvals for New York projects unless the city drops its congestion pricing scheme.

In a 109-page opinion, Liman ruled that the Trump administration had challenged New York's government "to a game of chicken" which would see the city either give up its attempt to reduce air pollution or face sanctions.

"The federal government may not force states to comply with its dictates by threatening destructive retribution, only to turn around once compliance is secured and claim that it was merely bluffing," Liman said.

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New York's congestion pricing scheme is closely modeled on London's Ultra Low Emissions Zone (ULEZ), championed by Mayor Sadiq Khan. It puts a charge of $9 on most passenger vehicles entering Manhattan during peak periods.

New York Governor Kathy Hochul said that Liman's decision vindicates "our right as a state to make decisions regarding what's best for our streets" and protects a project that is working to reduce air pollution.

In London, a report released by the mayoral office last year estimated that since the ULEZ policy came into place in 2020, emissions from road transport have on average reduced by 36% across the city.

Trump's transportation secretary Sean Duffy is opposed to such a scheme, claiming that it is "taxing the average Joe out of driving the streets of New York," despite admitting that it will work to reduce pollution.