Using national birth registers, a team of Imperial College researchers based in the capital analysed 540,000 births between the years of 2006 and 2010 in London.
The home address of the mother at the time of birth was noted down alongside the average monthly concentrations of nitrogen dioxide, nitrogen oxide and other traffic related pollutants.
Analysis of the data using statistical models found that increases in traffic related air pollutants were associated with 2% to 6% increased odds of low birth weight and 1% to 3% increased odds of being small for gestational age.
'Our findings suggest that air pollution from road traffic in London is adversely affecting fetal growth,' the report concludes.
'With the annual number of births projected to continue increasing in London, the absolute health burden will increase at the population level, unless air quality in London improves.'
And despite finding no concrete evidence to suggest that an increase traffic noise was associated with birth weight, the researchers stressed that they 'cannot rule out that an association might be observed in a study area with a wider range of noise exposures'.
Researchers are also confident that their findings are applicable to other cities in the UK and further afield in Europe.
Jonathan Grigg, professor of paediatric respiratory and environmental medicine at Queen Mary University, is in agreement with the BMJ's findings and thinks more needs to be done to protect mothers and their unborn children.
'Children in London and other large urban areas are currently inhaling traffic-derived pollutants that increase the risk of pneumonia and asthma, and stunt lung growth. This study suggests that damaging effects of air pollution start well before birth', he said.
'Since the vast majority of the most toxic vehicles on our roads are diesel cars and vans, the UK Government must introduce a national "remove and replace" diesel vehicle policy to protect the health of children - both born and to be born.'