Chancellor Rishi Sunak is expected to announce help for drivers to offset soaring prices at the pumps in this afternoon's spring budget.
Speculation has been mounting that a fuel duty cut of up to 5p a litre or a reduction in VAT is on the way.
But there are also concerns that the spring budget could also see North Sea producers hit by a windfall tax as their profits soar following the recent massive rise in the price of oil and gas.
Among those backing such a controversial move - which would be very unpopular in Aberdeen, the oil capital of Europe - is a former chief executive of energy giant BP, who has stated that calls for a windfall tax are "justifiable".
Lord John Browne, who headed up the group from 1995 to 2007, said prolonged high prices can strengthen the case for a windfall tax. He added: "Actually they are justifiable. Because, in the end, the resources are owned by the nation."
Labour is among those wanting a windfall tax, but the Chancellor has so far resisted, arguing that he wants energy firms to invest more in developing new fields as Britain transitions to a net zero economy.
However, North Sea energy companies believe they have a tacit agreement with UK ministers that if they step up investment in oil and gasfields they will be spared a windfall tax today.
One North Sea executive told the Financial Times that business secretary Kwasi Kwarteng had, before Russia’s invasion of Ukraine, talked of a “quid pro quo” with the industry, where the sector was spared harsher taxes in exchange for more investment.
“Now they are even more desperate for companies to invest,” the executive said. Kwarteng is opposed to a windfall tax, arguing that Britain needed the energy companies to invest to reduce reliance on imported power.
Also in the spring budget, Mr Sunak is expected to promise extra help for hard-pressed families.
This comes as analysis by the Institute for Fiscal Studies (IFS) showed people will face a triple whammy of £50.5billion a year - equivalent to £1,000 per adult - of Income Tax, National Insurance and Corporation Tax rises, on top of rising inflation and energy prices.
The Chancellor will say the tax rises are needed to plug a £400billion black hole from the Covid pandemic, strengthen the economy and reduce borrowing.
But he will also pledge to "stand by" families with extra Government support to help them cope with the cost-of-living crisis.
On top of the possible cut in fuel duty, it is anticipated Mr Sunak will wipe out the 1.25% National Insurance rise for lower-paid workers, by raising the threshold at which they start paying it. MPs are also urging a rise of up to 5% in benefits to help the poorest families.
Sir Charlie Bean, a former economist at the Office for Budget Responsibility (OBR), said Mr Sunak had an extra £20billion to £50billion "wriggle room" from better-than-expected tax revenues and a growing economy, which he could use to help families.
The Telegraph reports that the Chancellor will tell MPs today that a stronger economy will help counter the threat from Vladimir Putin's war in Ukraine.
"We will confront this challenge to our values not just in the arms and resources we send to Ukraine but in strengthening our economy here at home," he will say.
"So when I talk about security, yes - I mean responding to the war in Ukraine. But I also mean the security of a faster-growing economy. The security of more resilient public finances. And security for working families as we help with the cost of living."
Mr Sunak is on course to be one of the biggest tax-raising chancellors in post-war UK history, with the burden of taxation predicted to rise to 36.2% of GDP by 2026-27.
IFS director Paul Johnson told the Telegraph: "Rishi Sunak has announced more tax increases in his two years in charge than any Chancellor in modern times over the whole of their tenure.
"It has largely been smuggled in under the pandemic, but actually has very little to do with Covid. It is more that we are moving into a period when the state is getting bigger, in part due to the increasing money we're spending on the health service and other pressure from an ageing population."