Fuel retailers will be forced to provide up to date price information to drivers to prevent profiteering at the pumps, Downing Street has said.
Ministers will change the law to help motorists find the best prices more easily - and to monitor for excess profits.
Under the plans, pricing data will be made available for third parties to allow for the creation of price comparison apps and websites.
It comes as the Competition and Markets Authority (CMA) watchdog found drivers paid an extra 6p per litre for fuel at supermarkets last year as weak competition allowed stores to boost profit margins.
The Prime Minister's official spokesman said: "It isn't right that at a time when people are struggling with rising living costs, drivers aren't receiving a fair deal for fuel instead of being overcharged by retailers.
"That's why we will be setting up a new scheme to enable motorists to conveniently find the best fuel prices in real time and easily identify who is charging fair prices and possibly leaving and who is not.
"We will change the law to force retailers to provide up to date price information, increasing transparency and competition and competition, and in turn driving down prices and easing people's cost of living.
"New powers will also be handed to a public organisation yet to be decided to closely monitor the UK road fuel market, scrutinise prices and alert Government if further intervention is needed in the market."
Brits paid nearly £1 billion more for fuel at supermarkets last year as average margins increased by 6p between 2019 and 2022, the CMA said.
That led to an estimated combined additional cost of "around £900 million" for customers of Asda, Tesco, Sainsbury's and Morrisons.
CMA chief executive Sarah Cardell said: "Competition at the pump is not working as well as it should be and something needs to change swiftly to address this.
"Drivers buying fuel at supermarkets in 2022 have paid around 6p per litre more than they would have done otherwise due to the four major supermarkets increasing their margins.
"This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations. We need to reignite competition among fuel retailers."
Energy Security Secretary Grant Shapps said: "Some fuel retailers have been using motorists as cash cows – they jacked up their prices when fuel costs rocketed but failed to pass on savings now costs have fallen.
"It cannot be right that at a time when families are struggling with rising living costs, retailers are prioritising their bottom line, putting upwards pressure on inflation and pocketing hundreds of millions of pounds at the expense of hardworking people.
"Today I’m putting into action the CMA’s recommendations and standing by consumers – we’ll shine a light on rip-off retailers to drive down prices and make sure they’re held to account by putting into law new powers to increase transparency."
RAC fuel spokesman Simon Williams said: “This is a landmark day when it comes to fuel prices in the UK.
"The fact that drivers appear to have lost out to the tune of nearly £1bn as a result of increased retailer margins on fuel is nothing short of astounding in a cost-of-living crisis and confirms what we’ve been saying for many years that supermarkets haven’t been treating drivers fairly at the pumps.
“It’s all about action now and we're extremely pleased to see the Government has agreed to follow through with both of the CMA’s recommendations.
"While forcing retailers to publish pump prices is a positive step for drivers, what’s of far more significance is the creation of a fuel monitor function within government which, we very much hope, actively monitors wholesale prices to ensure forecourts don’t overcharge when the cost they pay to buy fuel drops. Without this, we fear drivers will continue to get a raw deal."
