0530 GMT March 19, 2019
The concession was one of several made by Prime Minister Edouard Philippe in a rare televised address, after the country was rocked by intense street clashes and vandalism in Paris over the weekend, AFP reported.
"This anger, you would have to be deaf and blind not to see it, nor hear it," Philippe said after more than a fortnight of demonstrations by so-called "yellow vest" protesters.
"No tax merits putting the unity of the nation in danger," he added.
Increases in regulated electricity and gas prices will also be frozen during the winter, while stricter vehicle emission controls set to take effect from January 1 will be suspended for six months, he said.
"The French people who have put on yellow vests love their country, they want lower taxes and for their work to pay: That's also what we want," Philippe said.
Pressure has been mounting after protests degenerated into the worst street clashes in central Paris in decades, leading to scores of injuries and arrests.
The concessions, coming after an earlier 500-million-euro (570 million-dollar) relief package for poorer households, mark the first time President Emmanuel Macron has had to give ground in the face of public opposition.
It was a blow for the former investment banker who has styled himself as a determined economic reformer.
Mass street protests have repeatedly forced previous French presidents into U-turns, something that Macron had vowed to avoid in his quest to "transform" the French economy and state.
But it was unclear if the measures would assuage the anger on French streets.
"The French don't want crumbs, they want the whole baguette," Benjamin Cauchy, one of the movement's organizers, told AFP earlier Monday when asked about the suspension of fuel taxes.
Far-right leader Marine Le Pen, a vocal supporter of the movement, said on Twitter that protesters wanted the fuel tax hike cancelled, not just suspended.
Rescinding the increase was the main demand of the demonstrators, alongside a higher minimum wage and the return of a wealth tax on high-earners which was abolished last year.
Philippe said Tuesday that France's minimum wage was already set to increase three percent from January, "one of the biggest increases in the past 25 years."
But the government is eager to avoid another day of running riots and burning cars, with some people already calling for fresh protests Saturday.
"If there is another day of protests, it must be declared in advance and must take place calmly," Philippe said.