Australian motorists will continue to receive fuel price relief for another month after the federal government announced an extension of the temporary fuel excise cut.

However, from July the discount will be reduced from 32 cents to 16 cents per litre, meaning drivers will still save money but not as much as before.

Prime Minister Anthony Albanese said the move aims to provide certainty for families and businesses still facing cost-of-living pressures amid ongoing global uncertainty.

The fuel tax reduction was originally introduced following disruptions to global oil supplies caused by conflict in the Middle East and has already cost the federal budget billions in lost revenue.

Treasurer Jim Chalmers said the extension would help ease pressure on households while fuel prices remain volatile.

While the government has not ruled out further support if global conditions worsen, officials say the gradual reduction is intended to help Australians adjust as broader cost-of-living measures, including tax cuts, take effect from July.