The Coalition leaders have decided to extend the current excise reductions on petrol and diesel until 1 September 2026.
After this date the previous rates will be gradually restored over the following four months.
The Cabinet will tomorrow consider the measures which will cost €270 million.
They will include a plan to restore the previous rates over four dates between September and the end of the year.
Government figures insist that the move means there will be no cliff edge for families and it will also continue to suppress inflation.
The decision follows a meeting of the Coalition leaders this evening.
The current measures mean there is an excise duty cut of 27 cent on a litre of petrol and 32 cent on a litre of diesel. The reductions are due to expire at the end of July.
Tánaiste Simon Harris will bring a memo to Cabinet tomorrow on the gradual reduction in the cuts.
The initial excise duty cuts were introduced in April as farmers, hauliers and others from the agricultural sector took part in demonstrations across the country.
They were protesting against the increase in fuel prices after the US and Israel attacked Iran.
Since the introduction of the cuts, oil prices are now back to where they were before the outbreak of war in Iran.
Aontú leader Peadar Tóibín said the Government's reversal was positive news, but it only came after significant pressure from his party and others.
"The key issue remains. Ireland is an excessively expensive country for energy. It is bad for families, it is bad for business, and it is bad for farmers.
"Given the current price trajectory for fuel, any efforts to jack up excise on petrol and diesel by 27c and 32c in September will be opposed by Aontú," he said.
