Chancellor scraps 2p rise in fuel duty... but Brown insists it has nothing to do with next week's crucial by-election

The Treasury left drivers with the prospect of further hardship next year by announcing that the increase, due to come into force in October, has been put off until next April.

And Gordon Brown's hopes of a boost to his political fortunes were dashed by Opposition accusations that the move was designed to buy off voters in next week's Glasgow East by-election.

Pump pressure: The 2p increase in fuel duty due in October has been scrapped

The Chancellor had been widely expected to dump the 2p-a-litre rise in the face of spiralling oil prices.

Motorists' and hauliers' groups broadly welcomed his announcement but there were immediate demands for the Government to do more to offset soaring petrol costs at the pump.

Labour MPs voiced concerns that Mr Brown's concession had failed to make the desired impact.

The statement was overshadowed by news that unemployment rose faster in June than in any month over the last 15 years.

The move will cost the Exchequer an estimated £550million in lost revenue, putting further strain on public finances.

Call for action: Protestors against Fuel Duty near Parliament Square

Scheduled increases for heating oils - which have also risen steeply over the past year - road fuel gases and biofuels will also be postponed.

Mr Darling said freezing fuel duty would 'help motorists and businesses get through what is a difficult time for everyone'.

No election ruse: Gordon Brown leaves Downing Street for Prime Minister's Questions on Wednesday

His aides said he wanted to avoid a summer of speculation about a decision that most considered a foregone conclusion.

His aides rejected claims that the move was linked to next Thursday's poll in Glasgow East, where Labour is fighting to hold a normally safe seat against the SNP.

Treasury sources pointed out that the increase had been written off before the by-election was announced three weeks ago.

'We said at the Budget in March that we would monitor oil prices before taking a decision.

'The cost of oil has gone up by $40 a barrel since then, so this is hardly surprising,' one said.

Mr Darling said: 'Postponing the planned increase in fuel duty is consistent with the Government's commitment to support the Bank of England in maintaining low inflation.'

The RAC said: 'This is welcome news but it does not go far enough.

Vote challenge: Scotland's First Minister Alex Salmond, left, and Councillor John Mason, right, launching the SNP's Glasgow East by-election campaign

'We would like to see the Chancellor not just postpone future rises but actually cut fuel duty.'

The cost of a litre of unleaded petrol averaged 119.5p across the UK yesterday, with diesel at 133p.

Figures show petrol prices have risen nearly a quarter during the past year, and diesel 36 per cent.

Peter Carroll of the Transaction 2007 group, which helped organise protests by lorry drivers in London this year, said the measure did not go far enough.

'What's happened today is a little like someone with a gaping wound going to hospital and merely having the blood wiped away.

'What we need is for the haulage industry to qualify for an essential user rebate on fuel which would cut the price of diesel by 25p a litre.'

London crawling: Hundreds of hauliers demonstrated against the rising cost of fuel earlier this month

Shadow Chancellor George Osborne said: 'After months of dithering, Alistair Darling has finally decided to postpone the 2p rise in fuel duty a week before the Glasgow East by-election.

'Now under pressure, he's Uturned on one of his car tax measures.

'Surely it can't be long before he shows his weakness again and backs down on the vehicle excise duty rise on family cars.'

The Tories have pledged to introduce a 'fair fuel duty stabiliser' which would lower the levy when the cost of oil goes up, and increase it when it falls.

Under the proposals, the Treasury would not benefit from unexpected rises in oil revenues, nor would it lose out from unplanned falls.