Assembly Speaker Sheldon Silver announced the decision after a survey of Democratic Assembly members in a private conference. The decision comes after days of closed-door negotiations, and means the city will forfeit $354 million in federal funding for trying to kick-start the plan.
The concept aimed to cut traffic and pollution by forcing more commuters onto mass transit. It would have charged most drivers $8 to drive below 60th Street between 6 a.m. and 6 p.m. Monday through Friday. Truckers would have paid $21.
The Legislature faced a Monday deadline to act on Mayor Michael Bloomberg's proposal, which was already endorsed by Democratic Gov. David Paterson, the Republican-led Senate and the City Council.
Bloomberg spokesman Stu Loeser did not immediately comment.
The plan ran into strenuous objections from legislators from outer boroughs and New York City suburbs who said it would unfairly target commuters and their constituents.
"The conference has decided that they are not prepared to do congestion pricing," Silver said. "Many members just don't believe in the concept. Many think this proposal is flawed. It will not be on the floor of the Assembly," he said.
Silver said part of the problem with the proposal, which Bloomberg had said could begin next year, is that it doesn't immediately provide funding to the Metropolitan Transportation Authority. He said the agency that runs the city's mass transit is already underfunded and needs to be bolstered before it takes on more commuters.