The Deputy Prime Minister, John Prescott, said last night that no decisions had been reached, but officials confirmed tougher limits were being considered as part of a consultation exercise.
The review on the "implications of speed", to be completed by the autumn, will include the option of reducing speed limits around schools from 30mph to 20mph. Although Downing Street has warned Mr Prescott against being seen to be "anti car", there is expected to be strong public support for safety measures to tackle speeding drivers in towns and on country roads.
The Government has been told that speed limiters could be fitted to passenger cars as they are with buses. Police are focusing on enforcing existing speed limits more rigorously. They are pressing for tougher action, and have told ministers eight times more deaths occur on country roads than in urban areas.
The Government is wary of a backlash from drivers but the Chancellor refused to confirm speculation that he is poised to end the "fuel escalator" on petrol as a sop to motorists.
Gordon Brown said the increases in petrol duty above the inflation rate had been introduced by the Tories, who were now calling for the escalator to be scrapped. Pointing out that the revenue was being used for public spending on health, education and transport, Mr Brown said: "This was an all-party commitment -- the Tories introduced it and the Liberal Democrats wanted a higher escalator.
"If the money didn't come from our petrol, we would have to find the money elsewhere or we would have to cut health and education.
"When people see the results ... they will see that we are raising money prudently and spending it well."
A fuel escalator halt could be announced in next year's Budget, but delayed until election year to soften the blow of a comprehensive transport Bill intended to dissuade people from commuting by car into towns.
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