The UK's second largest supermarket has sparked a pre-Christmas petrol price war by announcing a cut of up to 2p a litre on unleaded and 1p a litre on diesel.
The reductions from Asda, which come into effect on Wednesday, mean it will charge motorists across the UK no more than 126.7p a litre for unleaded petrol and 134.7p a litre for diesel.
Tesco, the UK's largest supermarket and also the largest fuel retailer, responded by saying it would also be dropping the price of petrol by up to 2p a litre and diesel by 1p a litre, also from Wednesday morning.
It said in a statement: "As Britain's biggest fuel retailer this means more motorists can make savings and earn Clubcard points at Tesco's 498 petrol filling stations than at any other fuel retailer."
Asda said that with drivers planning to travel on average 819 miles in December, it was bringing "some festive cheer" to hard-pressed motorists. Andy Peake, the firm's petrol trading director, said: "With Christmas just around the corner, and finances tighter than ever, we are pleased we can do our bit to make our customers' hard-earned cash go a little further. Other Scrooge retailers should share the Christmas spirit and follow our lead."
Pete Williams, head of external affairs at the RAC motoring group, said: "Cheaper fuel is something motorists will widely welcome and comes ahead of both last-minute Christmas shopping this weekend and the rush on the roads next week.
"The wholesale price of fuel is at its lowest rate since early November, so we hope other retailers pass on a similar saving. The RAC will continue to campaign on motorists' behalf into 2014 to help ensure prices are fair."
In his autumn statement, the chancellor George Osborne announced that fuel duty would be frozen in 2014, a move which he claimed would save the motorist 20p on every litre of petrol compared to the rises planned under Labour's "hated fuel duty escalator".
Cancelling the 2p duty rise means the tax per litre will stay at 57.95p. Motoring groups welcomed the move but said that the total tax, including VAT, still accounted for around 60% of the price drivers pay at the petrol pump.
Other retailers were mulling over the Asda price cut. Morrisons did not announce a reduction but said it would "remain competitive in every area we operate".
