Tolls on the Severn crossings linking England with Wales will be scrapped at the end of 2018, but ministers have been accused of timing the announcement to distract from a U-turn on rail electrification.
Welsh Secretary Alun Cairns said removing the tolls would boost the economy of South Wales by around £100 million a year and could save regular users of the bridges by car as much as £1,400 a year.
But Welsh First Minister Carwyn Jones said the announcement was a "desperate attempt" by the Government to draw attention away from the decision to abandon plans to electrify the rail line to Swansea.
Charges on the two Severn bridges apply only to westbound traffic - leading some to describe them as a "tax on entering Wales" - and stand at £6.70 for cars, £13.40 for large vans and minibuses, and £20 for buses and lorries.
Severn Crossings PLC was given the right to collect payments for 25 years as part of deal to build a second bridge in 1992. The two bridges will be operated by Highways England when they return to public ownership next year.
They are used by more than 25 million vehicles annually crossing the Bristol Channel on the M4.
Mr Cairns, announcing the move to business leaders in Newport, said: "The decision to abolish the Severn tolls next year sends a powerful message to businesses, commuters and tourists alike that the UK Government is committed to strengthening the Welsh economy.
"By ending tolls for the 25 million annual journeys between two nations we will strengthen the links between communities and help to transform the joint economic prospects of South Wales and the South West of England.
"I want to ensure that visitors and investors know what Wales has to offer socially, culturally and economically. Most importantly, I want the world to know how accessible we are to business.
"The decision we have taken today is right for Wales's future prosperity and I am sure that it will be welcomed by industry and motorists alike."
The announcement came a day after the Government dropped plans for the electrification of the main rail line between Cardiff and Swansea, a move Labour said "betrays a promise to South Wales".
The Department for Transport (DfT) said modern "bi-mode" trains, which can switch from electric to diesel mid-journey, meant the electrification work west of Cardiff on the Great Western line, and similar work on the Midland Main Line between Kettering, Nottingham and Sheffield, will no longer be needed.
Mr Jones said: "This is nothing but a desperate attempt by Alun Cairns to distract from yesterday's U-turn on electrification to Swansea."
But groups representing road users welcomed confirmation the tolls would be scrapped.
Ian Gallagher, head of policy for South West and Wales Freight Transport Association, said it was "excellent news for the growth of the Welsh and South West economies, a real shot in the arm for those businesses and commuters who use the bridges on a daily basis".
AA president Edmund King said: "At last the 'tax on Wales' is being abolished," but called on ministers to go further and scrap all tolls on public bridges.
RAC roads policy spokesman Nicholas Lyes said: "Where viable and where there are real, tangible economic benefits for doing so, we would encourage the Government to look at reducing or abolishing other crossing tolls across the country to help motorists who are feeling the squeeze of rising costs presently."
A spokesman for Welsh Government Economy Secretary Ken Skates said: "This 'announcement' fools no-one. We've been calling for the scrapping of the Severn Bridge tolls for some time and, given that this was a manifesto commitment from all parties, this is more of a thinly veiled attempt at a sweetener than it is news.
"It's been quite rightly recognised as a desperate attempt by the UK Conservative Government to make amends for its broken promise of rail electrification from Cardiff to Swansea. Investment in rail and road infrastructure should go hand in hand but instead Westminster continues to find new ways of using spin and deception to let Wales down.
"Today's panic measure is yet another example of the UK Conservative Government making policy up on the hoof. It's a chaotic way to do business."