Increases in regulated rail fares will be capped at 2.5 per cent in 2015, chancellor George Osborne has announced.
Rail passengers were expecting a rise of 3.5 per cent in January, as fare rises would normally be determined by adding 1% to the latest Retail Prices Index inflation figure, which is 2.5%.
He also confirmed the government's controversial 'flex' system will be scrapped – whereby train operators could raise some fares by up to two per cent above the permitted average.
Osborne claims this move will help more than 250,000 season ticket holders save around £75 across 2014 and 2015.
"Support for hardworking taxpayers is at the heart of our long term economic plan," he said.
"It’s only because we’ve taken difficult decisions on the public finances that we can afford to help families further."
Martin Abrams, of the Campaign for Better Transport, said the announcement would be a "welcome relief to millions of people".
"Hopefully it's an indication that the government will now implement a coherent plan of much-needed investment which removes the burden from passengers," he said.
"Fares need to be held down for the long term while wages catch up, and the inflation formula finally needs to change from the retail price index to the lower, fairer consumer price index to bring it in line with other measures."