Mr Osborne had first floated the idea of helping motorists with petrol and diesel costs in September. Fuel duty will remain at 57.95 pence per litre – where it has been since March 2011.
The move comes after it was announced the tax disc, which shows motorists have paid vehicle excise duty, is to be replaced by an electronic system. The new system, expected to come into effect in October 2014, will allow people to pay the charge by monthly direct debit.
Mr Osborne said the move on fuel would “help those who drive a car”.
He said, “I said earlier this autumn that if we could find the money, I’d like to go on freezing duty. Today I can report that because we have taken difficult decisions to control the public finances, I can deliver on that promise.”
He also claimed the coalition government, which came into office in 2010, had reduced the cost of a tank full of fuel by £11 through a series of restrictions on the levy. The duty will now be frozen for the life of the current Parliament, until May 2015.