The Government has cancelled plans to increase fuel duty by 3p in January.
Chancellor George Osborne announced in his Autumn Statement that the 5p price hike due to be introduced in August next year will also be reduced to 3p.
The news will come as welcome respite to motorists who may be struggling to cope with soaring fuel prices alongside other costs such ascar insurance.
It comes after Mr Osborne cut fuel duty by 1p in this year's Budget.
The Chancellor said the plans would help the millions of people who use their cars to get to work and take their children to school.
Families will save as much as £144 on filling up their cars by the end of next year, he added.
RAC Foundation director Professor Stephen Glaister said the move would benefit motorists and the wider economy.
He said: "Figures out today show transport is the single biggest area of expense for the average household, with £1 out of every £8 going on motoring.
"On paper, the scrapping of the 3p fuel duty rise in January will cost the Chancellor about £1.5 billion, but it will bring real respite to the nation's 34 million drivers and mean they can get out and contribute to economic growth, which should be good news for the Treasury."
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