India's top court on Tuesday said it was considering banning new diesel-guzzling SUVs and luxury cars from the streets of New Delhi in a bid to improve the capital's notoriously toxic air.

The Supreme Court said it was mulling a ban on purchases of new diesel vehicles with engines over 2000cc, typical of SUVs, jeeps and large cars made by BMW, Toyota and others.

"Why should a rich man be travelling in a diesel car and pollute the environment?" Supreme Court Judge T. S. Thakur asked, in response to a petitioner's plea.

"People's life is at stake and you are interested in selling cars," the judge said, addressing auto dealers, who fiercely oppose the ban first suggested by India's environment court last week.

A final order is expected by the Supreme Court on Wednesday.

The radical proposal comes after the Delhi government earlier this month said private vehicles will only be allowed on the capital's roads on alternate days for a 15-day trial period in January.

The Supreme Court also said Tuesday it would double the surcharge on light commercial vehicles and trucks entering Delhi from the existing 700 rupees ($10) and 1,300 rupees ($19) respectively.

Yet Indian Oil Corporation, India's largest oil firm, said Tuesday it was cutting the price of diesel by 46 paisa (cents) a litre and petrol by 50 paisa a litre with effect from midnight.

More than 1,400 new cars are added every day to the 8.5 million vehicles on Delhi's roads, contributing to a hazardous blanket of smog.

Successive Delhi governments have been criticised for failing to curb pollution in the city of 17 million, ranked as having the worst air quality of any capital by the World Health Organisation.

Courts have been pushing authorities to act, including ordering a toll on the thousands of trucks entering the city every night.

Environmentalists welcomed the Supreme Court's comments Tuesday.

"The highest court... is absolutely clear that there can be no compromise when it comes to the health of the people," said Sunita Narain, head of the Delhi-based Centre for Science and Environment.

"I think this is a turning point today in Delhi's history of fighting air pollution and I hope we will do more," she told NDTV news network.

Delhi's air routinely worsens in the winter as residents start lighting fires to stay warm and as cooler air and clouds trap pollutants.

But unlike Beijing, which also suffers from hazardous haze levels, the city does not issue public health warnings.

Over 23 percent of the cars on Delhi roads run on diesel which produces much more carcinogenic nitrogen oxide than petrol cars.

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