Speaking to the House of Comments, Mr Osborne acknowledged the pain being felt by motorists and businesses over current fuel prices and confirmed that the Government is to postpone the inflation-only fuel duty rise for 1 April until 1 January 2012 while the 2012-13 rise will be effected on 1 August 2012. Instead he has implemented a 1p per litre cut in fuel duty from 6pm tonight, 23 March.

The fuel duty escalator will be abolished and will be replaced by a fair fuel stabiliser, which will kick in when oil prices reach $75 a barrel and will be funded by an increased charge on oil and gas production, from 20% to 32%.

Mr Osborne said that he'd rejected Labour's idea of reducing VAT on fuel as this wouldn't offset the rise in prices and any decrease wouldn't be able to come into effect for six years as it would currently be illegal.

He also announced that the duty differential for liquefied petroleum gas will be maintained until 1 January 2012 when it will be reduced by 1 penny per litre.