Hard-pressed drivers were given some respite today when Chancellor George Osborne decided to scrap the 3p-a-litre fuel duty increase planned for January 2013.
The planned hike would have meant drivers filling an average tank would have had to fork out almost £2 more for petrol or diesel.
But Mr Osborne said he was not merely postponing the 3p rise until April 2013 but axing it altogether.
He said it would help families and businesses across the country.
The decision was welcomed by AA president Edmund King. He said: "This decision avoids a new year's headache and a long hangover for all drivers and is very much welcomed by the AA.
"Big Ben's chimes ringing in a nearly £2-a-tank hike in petrol and diesel prices would have back fired on the Government and economy."
He went on: "The Treasury may have thought that a fuel duty increase in the winter, when petrol is usually cheaper, would have been easier. But, toasting the new year with Champagne at a lower duty rate than road fuel underlines successive governments' failure to spot the difference between a luxury and a necessity.
"In 20 years, UK motoring has cut its fuel consumption by 20% (12.8 billion litres), but contributes 144% more (£15.81 billion) in fuel duty tax.
"In the last financial year, the Treasury collected its second highest-ever haul of fuel duty from UK drivers - a whopping £26.8 billion.
"That is two and a half times more than what is spent on UK roads (£9.8 billion), even before receipts from Vehicle Excise Duty, VAT, company car tax and new car tax are added."
RAC Foundation director Professor Stephen Glaister said: "Yesterday an official report showed transport was the biggest area of household expenditure bar none, with fuel costs a big and rising part of that. Today it is a relief to see the Chancellor has read it and acted on it.
"Britain's 35 million motorists each average about 7,000 miles a year. Cancelling this rise will save them a combined total of more than a £1 billion annually, money which they can use to ease their financial headaches and help support the economy through their own spending.
"It's not as if drivers aren't already paying a huge amount in tax. Even without an increase, 60% of the pump price goes to the Exchequer."
Quentin Willson of FairFuelUK said: "We have worked tirelessly to convince MPs and ministers that the 3p rise would be enormously damaging to the economic recovery.
"To their credit the Treasury and the Chancellor have engaged constructively and have made the right decision."
Friends of the Earth's executive director Andy Atkins said: "Motorists will continue to pay a heavy price until we wean our cars off of their dependency on petrol and diesel.
"A few pence off fuel duty is simply tinkering under the bonnet. Ministers must completely overhaul their motoring strategy so we can have cleaner, cheaper transport in the future."
Among groups welcoming the fuel-duty axing were the British Retail Consortium which said it would help boost consumer confidence.
Campaign for Better Transport said the decision was in "sharp contrast to 10 years of above-inflation rail fare rises".