Regulated rail fares will rise by 6% in the new year, not the expected 8%.
The Chancellor today announced train prices will be calculated using July's 5% retail prices index (RPI) measure of inflation plus 1%.
Prices were due to be calculated using the RPI measure of inflation plus 3%, as they will be in future years.
This will apply across National Rail regulated fares, which includes season tickets and long distance off-peak fares.
However, as this is an average figure, they could jump by up to 11% for some, as train firms are allowed a 5% point swing either way, though this means others will see smaller hikes.
The 6% rise also affects London tube and bus fares in the new year, which were due to go up by 7%. London tube and bus fares were due to be calculated using July's RPI figure of 5%, plus 2%, as they will be in future. For one year, it will be RPI plus 1%.
Osborne says the reduction in the planned fares rises, which will be funded by the Government, will "help the millions of people who use the trains".
Manuel Cortes, leader of the TSSA rail union, says: "We always welcome the sinner that repents but in George Osborne's case he plans to go right back to sinning against rail passengers for the next three years from 2013 with big inflation-plus increases.
"Our gut feeling is that he is really more interested in helping Boris (Johnson) beat Ken (Livingstone) for London Mayor next May rather than helping ordinary families, hence his curbing the big increases for one year only."