Chancellor Rachel Reeves is expected to axe the controversial fuel duty hike this week following months of complaints from drivers about extortionate prices at the pumps.
Reports suggest that the Government will cancel the planned rise in fuel duty later this year, in a move that could save drivers hundreds of pounds.
Motorists have been battling expensive prices at the pumps since the start of the Iran war at the end of February, with prices reaching their highest prices in more than three years.
While prices have fallen slightly since costs peaked in Mid-April, drivers are still paying 25.2p more since the outbreak of war, while diesel is 44.3p more expensive per litre.
Data from RAC Fuel Watch suggests that unleaded prices are likely to rise further, although diesel "should fall".
It comes as tensions in the Middle East continue to have an effect on the global oil market, further forcing up petrol and diesel prices for motorists.
The Sun reported that the Chancellor is expected to announce a range of measures to help Britons with the cost of living crisis.
This is believed to include changes to the planned rise of fuel duty, which is presently expected to take place from September.
Chancellor Rachel Reeves could slash the planned fuel duty hike this week in a win for petrol and diesel drivers
|GETTY/PA
Labour has hesitated in launching measures to mitigate the rapidly increasing fuel prices, despite pressure from motorists and opposition political parties.
As announced in the Autumn Budget, the Chancellor said the Government would reverse the 5p per litre fuel duty cut introduced following the Russian invasion of Ukraine in 2022.
Under current plans, the fuel duty cut will be reversed by 1p in September, 2p in December and a final 2p in March next year.
At this point, the Government could decide to increase the rate of fuel duty in line with inflation, which would be the first hike in 15 years.
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Reform UK's Treasury spokesperson, Robert Jenrick, and FairFuelUK founder Howard Cox attended a fuel protest in Westminster last month
| XA spokesperson for the Treasury said the Government would not be commenting on "tax speculation".
During the Budget, Ms Reeves, who represents Leeds West and Pudsey, said the fuel duty freeze would be placed alongside other measures to cut costs.
This included the launch of the Fuel Finder scheme, which is designed to show drivers up-to-date prices of petrol, diesel and premium fuels in their local area.
Fuel Finder was officially launched in February, with hopes that the data will be integrated into navigation apps in the near future.
Petrol and diesel prices peaked in the summer of 2022 after the Russian invasion of Ukraine
| PAModelling suggests that drivers could save around £40 a year using the tool, while separate data stated that savings of between one and six pence per litre were also possible.
Commenting on the plans to axe the planned hike of fuel duty, FairFuelUK founder Howard Cox described Labour as "stubborn" for refusing to make changes in the wake of the Iran war.
This was despite other European nations lowering fuel taxes, capping petrol and diesel prices, or even introducing rationing of fuel.
"The current cost of petrol, particularly diesel, is crippling motorists' and small businesses' ability to spend in the economy," Mr Cox said.