The government has announced it will postpone its 3p-a-litre rise in fuel duty in August until January next year.
The move follows a campaign by road users' groups, who argued the increase would damage the economy.
Fuel duty will be frozen for the rest of the year, Chancellor George Osborne told MPs, adding that this would benefit families and businesses.
Labour, the SNP, Plaid Cymru and MPs from other parties had threatened to force a Commons vote on the issue.
The Sun newspaper and several Conservative MPs have also been pushing for a change of heart, amid concerns that prices at the pumps are squeezing living standards.
Announcing the postponement of the duty rise, Mr Osborne said: "We are on the side of working families and businesses and this will fuel our recovery at this very difficult economic time for the world."
'Difficult decisions'
The government was "doing everything we can", he told the Commons, adding: "The one-off cost of this change will be fully paid for by the larger-than-forecast savings in departmental budgets."
In last year's Autumn Statement Mr Osborne cancelled a scheduled 3p rise in fuel duty for January this year but said another planned rise this August would proceed - although it would be cut from 5p to 3p.
A Downing Street spokesman said the issue had not been discussed at Tuesday's cabinet meeting, adding that it had been "under consideration" for some time.
Labour has called for the increase to be delayed until next January, saying the cost - between £500m and £600m - could be covered by the underspend on the Olympics budget or by closing tax loopholes and reversing changes to tax allowances for pension contributions for those earning more than £150,000.
In the Commons, Mr Balls told the Commons that Mr Osborne was a "part-time, U-turning chancellor" who would "not assume responsibility for his own decisions".
But Mr Osborne said road users would be paying 10p a litre more in taxation had Labour still been in power.
SNP Treasury spokesperson Stewart Hosie MP said: "This is a great result... the chancellor's cave-in comes on the day that our Budget clause, supported by 54 MPs from across nine parties, was due to be tabled ahead of the Finance debates next week."
Plaid Cymru's Westminster leader, Elfyn Llywd, said: "This latest in a string of government U-turns will offer people some relief as they struggle to make ends meet - at least until the end of the year as the chancellor has noted...
"Plaid Cymru alongside the SNP have been calling for a genuine fuel duty stabiliser for nearly a decade and that is yet to be achieved, but at least this further damage has been avoided."
http://www.bbc.co.uk/news/uk-politics-18588855
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