The cost of a theory test is being reduced by 25% in October, taking the cost down from £31 to £25, and with a further drop of £2 lined up for October next year.
Theory test fees for motorbikes and other vehicles are also set to be cut, a spokesman said.
Transport minister Stephen Hammond said: "We want to keep costs down for all motorists - that's why we have frozen fuel duty - and by reducing the cost of the theory test we will save aspiring motorists around £9 million annually.
"This has been achieved without compromising on the vital role the theory test plays in making sure that new drivers know the Highway Code and the rules of the road.
"I am delighted that theory tests will now offer better value for money while continuing to meet these rigorous standards."