The proposal covers the islands of the Inner and Outer Hebrides, the Northern Isles, the islands in the Clyde and the Isles of Scilly. It will see 5p a litre slashes from the forecourt prices.
Prices on the islands are on average 10p a litre more expensive than those on the mainland due to increase transport and distribution costs.
Government sources said it could take a number of months for the scheme to be implemented.
At present, the UK government
adds demands 57.95p a litre in fuel duty, this is more than 10p more than cost of the product.