Charges for the least-polluting vehicles would be halved as an incentive to motorists to reduce exhaust emissions, council leader James Kempton (Lib Dem) said.
'It will be a challenge to secure a high turnout,' he said.
Cars built before 2001 would be rated into categories of pollution by engine. More modern ones carry pollution designations.
A council spokeswoman said it was believed to be the first referendum on tackling climate change in the UK.
Mr Kempton said:
'Everyone agrees we have to make changes to help tackle climate change, but not everyone agrees on which changes we should make.
Executive member for environment, Lucy Watt, said: 'All cars are polluting, but we understand that some people are reliant on them in their everyday lives. This new permit system would give people an incentive to switch from a 'gas guzzler' to a less polluting car.'
The changes to the permit system would link residents parking permit charges to CO2 emission rates and vehicle engine size. They are designed to be 'revenue neutral' - so they would not increase Islington LBC's income from parking permit charges.
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