Chancellor Rishi Sunak has announced that fuel duty is to remain frozen for the 11th consecutive year.
Mr Sunak revealed in his Budget that the rate will remain at 58p per litre for petrol and diesel.
He told the Commons: “Right now, to keep the cost of living low, I’m not prepared to increase the cost of a tank of fuel.
“So the planned increase in fuel duty is also cancelled.”
Fuel duty has been frozen since March 2011.
A Treasury document stated that this has cumulatively saved the average car driver £1,600.
AA president Edmund King said: “We are on the road to recovery so this freeze in fuel duty helps to keep us on track.
“It will be welcomed by the car-dependent, key workers and all businesses that rely on road transport.
“It will also help clinically vulnerable people who need to avoid public transport to keep safe due to the pandemic.
“The freeze allows the full weight of UK staycation spending to be focused on B&Bs, pubs and restaurants, not siphoned off at the tank, the bar or the table.”
RAC head of policy Nicholas Lyes said: “Drivers will breathe a sigh of relief that the Chancellor has decided not to rock the fuel duty boat.
“We feared this would only pile further misery on drivers at a time when pump prices are on the rise and many household incomes are being squeezed as a result of the pandemic.
“Many drivers see their cars as a safe way to carry out essential journeys and believe having access to a vehicle is even more important as a result of the pandemic.
“If the Chancellor had raised fuel duty, he could have risked choking any economic recovery as it would have led to increased costs for consumers and businesses.”
The policy has been criticised by environmental groups, who claim it contradicts efforts to tackle climate change.
Mike Childs, of Friends of the Earth, said: “It’s astonishing that a Government pledging to confront the climate emergency has frozen fuel duty yet again.
“No wonder passenger cars’ contribution to the climate crisis has barely fallen in the past decade.
“The sale of gas-guzzling SUVs are a particular concern, as they have helped drive a rise in average emissions from new cars in the last five years.
“Rishi Sunak should be doing more to discourage the purchase of these polluting vehicles – such as slapping a significant increase in road tax on them.
“It’s time for a green transport revolution, with cleaner cars and better alternatives to driving such as efficient and affordable public transport and safer cycling facilities.”
The Treasury said: “Future fuel duty rates will be considered in the context of the UK’s commitment to reach net-zero emissions by 2050.”