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Chancellor George Osborne has said he is considering cancelling the fuel duty increase due to take effect in April.

There is growing pressure to have a rethink on an extra 1p-a-litre rise at a time when petrol prices have soared after oil price and VAT increases.

He told ´óÏó´«Ã½ WM that the government could do "something about it" in the Budget on 23 March, saying: "We can over-ride it. We are looking at that."

But Labour said coalition was "all over the place" on fuel pricing.

The government has come under pressure from motorists to scrap the duty rise, as the cost of a litre of unleaded petrol has risen to almost £1.30 because of high global oil prices and this month's VAT hike to 20%.

Fuel duty already costs 58.95p for every litre of petrol.

Labour chancellor Alistair Darling announced a further 1p a-litre rise for this April in last year's Budget. This comes on top of an inflation-adjusted increase, meaning motorists are expected to pay at least an extra 3p a litre from this date.

Mr Osborne said he was also looking at the idea of a fuel stabiliser, so "the government steps in to try to protect people from the effects" of petrol price rises by cutting the level of duty.

When asked later about the possibility of scrapping the proposed increase in fuel duty, Business Secretary Vince Cable told Westminster journalists: "Any attempt to change the duty regime is expensive... but if he (Mr Osborne) says he's looking at it, then he's looking at it."

For Labour, shadow transport secretary Maria Eagle said: "The Conservative-led government is all over the place on fuel prices. Each week ministers raise expectations of action but they've still done nothing.

"Warm words from George Osborne about a 1p change on fuel duty are all well and good, but families are paying 3p a litre more at the pump because of the VAT rise he chose to bring in."