The chancellor Alistair Darling has decided to cancel a scheduled 2p rise in fuel tax.

Mr Darling said he wanted to help normal people and businesses in difficult economic times.

The 2p rise was due to begin in October.

Labour MPs had been calling on the chancellor to make a U-turn on the issue before the autumn, when many predicted it would appear more like a climb-down.

It was not immediately clear when or if the 2p increase would be re-introduced.

“The global credit crunch and sharp rise in world oil prices have pushed up prices at the pump,” Mr Darling said.

“Today’s decision will help motorists and businesses get through what is a difficult time for everyone.”

The chancellor added: “This measure is taken in response to sharp rises in world commodity prices, with the price of oil almost doubling over the past year to
reach a real-terms record high of $146 (£73) a barrel recently.

“This has inevitably had significant knock-on effects on the price of road
fuels, which the government is committed to taking into account when considering decisions on fuel duties.”

The RAC welcomed the news but demanded more action.

“This is welcome news but it does not go far enough,” the driving body stated.

“We would like to see the chancellor not just postpone future rises but actually cut fuel duty.”

A series of protests by lorry drivers against the decision are believed to have made an impression on the government, with Gordon Brown admitting earlier this month that the delay announced today was a distinct possibility and something that the government was looking at “very, very carefully”.

Yesterday David Cameron unveiled Tory plans for tax duty to fall with rising oil prices.

He said: “At the moment, tax revenues rise and fall with the oil price.

“The increase in revenues from the North Sea more than offset any dampening impact high oil prices will have on tax receipts from the wider economy.”

He added: “Oil goes up, the tax goes up, people feel all the pain – and the government gets all the gain. A fair fuel stabiliser will end that.”