Plans to give drivers access to price comparison technology to help them find the cheapest petrol or diesel have moved a step closer this week.

Millions of motorists will be able to get the latest petrol station prices at the simple click of a button under the proposed Pumpwatch scheme.

The system, which would adopt similiar technology to that used when people book flights or search for insurance cover, would make all fuel stations in the country legally bound to share their real-time price information with an organisation appointed by the government.

While helping drivers to shop for cheaper fuel it is hoped the concept will also drive down prices at the pumps by introduding greater transparency and some competition at the forecourts.

Customers and retailers are now being asked for their views on the government’s proposal, which ministers suggest could save drivers up to 3p a litre on fuel by tapping into the data via everyday apps, journey planning tools, price comparison websites or even in-car technology.

A similar scheme, launched in Queensland, Australia, saw drivers save on average $93 – or £48 per year - by making it easier for them to shop around.

Twelve of the biggest retailers, including all four fuel-selling supermarkets, have signed up to an interim voluntary scheme run by the Competition and Markets Authority (CMA) to share their daily prices but Pumpwatch hopes to go one step further.

Last year, a report by the CMA revealed some retailers had failed to pass on savings in oil prices - charging drivers 6p more per litre for fuel, which amounted to £900 million in extra costs in 2022 alone.

Minister for Energy Affordability and Skills Amanda Solloway explained: “Our plans are laying the foundations for new fuel finder tools, making it easy for drivers to find the cheapest deals.”

Recent statistics show that fuel prices were around 5p a litre lower on December 25 when compared to the start of the month while prices declined by an average of 2.1p per litre per week between November 13 and December 25. Over the four weeks between October 9 and November 6, petrol pump prices fell by 2.7p per litre.

RAC fuel spokesman Simon Williams welcomes the launch of the consultation stage.

He said: “This is a really important day as it should pave the way for fairer fuel pricing for everyone who drives.

“Sadly, there have been far too many occasions where drivers have lost out at the pumps when wholesale prices have fallen significantly and those reductions haven’t been passed on quickly enough or fully enough by retailers.”