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Canadians will be offered bicycles, public transit passes or cash if they agree to scrap their old gas-guzzling vehicles.
Ottawa says five million of the 18 million cars and trucks in Canada were made before 1996, when tougher emissions standards were introduced. The older vehicles produce about 19 times more pollutants than newer models, the government said.
The Conservative government, heavily criticised for effectively abandoning the Kyoto protocol on climate change, is keen to show it is doing something to curb emissions and protect the environment.
Whether the programme catches on outside major cities is another matter. Canada is the world's second largest country with a relatively underdeveloped public transit network.
The National Vehicle Scrappage Programme will be up and running by January 2009. Other incentives include C$300 (NZ$378) in cash, membership in a car-sharing programme or a rebate on the purchase of a new vehicle.
Ottawa will spend C$92 million over four years to fund the programme.
