He wants to increase average Band D bills by £31.59 a year from April, with £15 of the increase being used to safeguard free travel for under 18s and Londoners over 60.
Another £15 will be spent on policing and the remainder of £1.59 will go to the London fire brigade to help implement post-Grenfell improvements.
The extra income from the C-charge will be combined with the additional £15 from the Mayor’s council tax “precept” to fund the free travel concessions, which will cost about £110m to £130m a year.
Free travel for under 18s and the 60+ Oyster photocard are currently funded by the Government but Ministers said this support would be withdrawn from April.
In response, Mr Khan has decided to increase his council tax precept by a total of 9.5 per cent, from £332.07 to £363.66, rather than axe the travel concessions.
His Tory rival Shaun Bailey accused him of “choosing to tax hardworking Londoners” rather than eliminating waste and perks at TfL or finding innovative solutions, such as corporate sponsorship of Tube lines and stations.
The increase, if ratified by the London Assembly next month, will mean Mr Khan’s share of Band D bills will have increased by £87.66 or 31 per cent since he became Mayor in 2016.
It is not the biggest hike imposed by a Mayor – Ken Livingstone increased bills by £50.52, or 29 per cent, in 2003.
Mr Khan had previously admitted concerns that the “regressive” council tax hit lower income households hardest but said today that free travel was “more important than ever for the poorest Londoners” at a time of economic uncertainty.
The council tax hike will generate about £43m for the travel concessions, leaving between £67m and £87m to be covered by the £15 C-charge.
A further £43m will be provided to the Metropolitan police, targeted at neighbourhood officers and violent crime.
Mr Khan said: “I fully recognise that in many households, finances are more stretched than ever before because of the pandemic and this decision is not taken lightly. Council tax is a regressive tax but the Government have left us with little other option.