The income from fines, pay-and-display tickets, and residential parking permits soared by more than £3m in the last financial year, according to new figures released under the Freedom of Information Act.

The increase is largely the result of an expansion of the "controlled parking zone", which now takes in several city suburbs.

Critics today accused the council of using drivers as an "easy target" to help tackle its financial woes.

The local authority insisted, however, that all money is ring-fenced for transport improvements in the Capital.

Between 2003 and 2007, the council's parking revenue rose marginally from £16.6m, before last year's sudden 18 per cent increase. The largest source of income came from pay-and-display tickets – up from £9.88m in 2006-07 to £11.58m last year.

Bruce Young, Lothian and Borders co-ordinator of the Association of British Drivers, said: "Far fewer people are driving into the city centre, so this is because there's been an extension to the controlled parking zone.

"It's actually less about controlling parking, and more about bringing in as much money as possible to recoup the losses from the congestion charging plans. They have not forgiven us for that.

"In all honesty, this is because the council is desperate for cash and motorists are an easy target."

The council has a contract with NCP to enforce parking rules, and last year that cost £4.48m. On top of that, the council paid out over £400,000 to maintain ticket machines.

The income included £6.75m from fines – over £1m more than the previous year, but less than the three years before that.

Many city centre streets, including George Street, Chambers Street and Melville Street, recorded big drops in the number of penalties, while less congested roads away from the centre emerged as the new ticket hotspots.

Council leaders believe the drop is down to better use of Edinburgh's variety of parking options, but business leaders say the falling number of city centre shoppers is the real explanation.

Nigel Duncan, vice chairman of the Federation of Small Businesses Edinburgh, said: "The council is getting a windfall, but that's to the detriment of the number of people coming to the city centre.

"Anything that stops people coming in is not good for Edinburgh's economy. If you look around the streets, there's a lack of people vying for parking spaces,

and people from the outside won't come because they think the blue meanies will get them. This sends out the wrong signal."

City transport leader Phil Wheeler said: "The income from parking is ring-fenced and goes straight back into improving the condition of our roads and pavements. This council has budgeted £20m a year over the next three years to address the backlog of repairs and upgrades required for the benefit of people in the city."