Motorists who fill their cars with LPG will be compensated if emissions trading increases the price.
The Federal Government has already pledged to cut fuel taxes to ease pressure on petrol prices under its plan to tackle climate change.
Climate Change Minister Penny Wong said yesterday the commitment to help motorists would also apply to liquefied petroleum gas.
''However, we will need to consult with the industry about what the best way to deliver that will be,'' she said.
Fuel taxes will be cut, on a cent-for-cent basis, to offset the initial impact on petrol prices associated with the introduction of emissions trading in 2010.
If motorists pay 5c extra a litre for petrol as a result of the scheme, fuel taxes will also be cut by 5c under the measure that will be reviewed in 2013.
It was part of the Government's green paper on emissions trading, a document that has been strongly criticised by the Opposition, Greens and Family First.
About 1000 of Australia's biggest businesses would be involved in the scheme with special concessions such as cash and free carbon permits to ease the impact on coal-fired electricity generators.
Electricity and gas prices were likely to increase by 16 per cent and 6 per cent respectively if the carbon price was set at $20 a tonne.
The cost of living could rise by slightly less than 1 per cent.
Treasurer Wayne Swan said this was a one-off impact, which was unlikely to lead to the Reserve Bank lifting interest rates.
The Government would offer financial relief to welfare recipients, low-income earners and middle-income households to help meet the rising cost of living.
Prime Minister Kevin Rudd said yesterday it was impossible to set-up a cost-free scheme. ''The key thing though is there is a huge cost to Australia if we fail to act,'' Mr Rudd said.
''This is already the world's hottest and driest continent. We are therefore likely to be hardest hit and earliest by climate change.''
Mr Rudd and Senator Wong tried to ratchet-up pressure on the Opposition to support the scheme.
Opposition Leader Dr Brendan Nelson said the scheme was akin to a new tax on petrol, groceries and electricity that would ''seriously squeeze middle Australia''.
Opposition treasury spokesman Malcolm Turnbull said it was hard to make an informed comment on the proposal because the Government had failed to provide enough details, including the cost.
Opposition spokesman on the environment Greg Hunt said the Government had copied the Coalition's policy.
''First, we support the idea of emissions trading. We proposed it,'' Mr Hunt said.
''Basically what they've done is they've dusted off the document that we had, adhered to what we said on a short-term approach on petrol ...''
If the Coalition opposed the legislation in the Senate, the Government would need to rely on the minor parties who were disappointed with the green paper.
Senator Wong said it was ''jumping the gun'' to suggest the Government would consider a double dissolution if the Senate blocked its plans. The Carbon Pollution Reduction Scheme deserved bipartisan support.