The Congress-led United Progressive Alliance government is likely to announce the hike in petrol prices on Tuesday.

The rise in petro-product prices have been necessitated by rising global costs of petroleum and the fact that the price of petrol and diesel has not been increased in India since January 2004.

The proposal to increase the auto fuel prices and revise the subsidy scheme for cooking gas and kerosene is likely to come up at the Cabinet meeting on Tuesday morning, sources said.

Petrol and diesel prices are likely to be raised by about Rs 1 to Rs 1.25 per litre in view of $7 per barrel surge in crude oil prices.

The UPA government will rework the new prices and Petroleum Minister Mani Shankar Aiyar will likely announce the final prices on Tuesday. The unprecedented surge in international crude prices has made the government sit up and take some steps so as to keep Indian oil marketing companies from running up huge losses.

Earlier on Monday, the government could not make up its mind on increasing the auto fuel prices and sought to hold more consultations with its coalition partners over the issue.

Prime Minister Manmohan Singh on Monday discussed the impact of $7-a-barrel hike in the cost of raw material (crude) with Finance Minister P Chidambaram and Petroleum Minister Mani Shankar Aiyar but no clear decision emerged from the meeting.

Officials of the ministries of finance and petroleum will reconcile the impact of measures like a cut in customs and excise duties on crude and products, increasing subsidies on LPG and kerosene, before arriving at the price revision.

"We will then go back to the prime minister for further consultations and will let you know of the decision as soon as we arrive at one," said an official, indicating an announcement may come by Tuesday.

The finance ministry is believed to have resisted slashing of duties, without which petrol prices in Delhi will have to be raised by Rs 3.53 per litre -- to Rs 37.24 from Rs 33.71 -- and diesel prices by Rs 2.25 per litre -- to Rs 23.99 from Rs 21.74 per litre.

Petrol and diesel prices were last revised on January 1 and have been kept artificially low despite the rise in crude prices.

Petroleum Secretary B K Chaturvedi, who took over as Cabinet Secretary on Monday, and revenue secretary Vineeta Rai, briefed Singh on the implication of the $7 per barrel hike in crude oil prices, which had necessitated a Rs 2-3 per litre hike in petrol and diesel prices at home.

The revision of petrol and diesel prices will most probably be a combination of a hike in petro prices and a reduction in duties.

Meanwhile, the Left parties -- both CPI and CPM -- too are said to be supporting the petroleum ministry's suggestion to give in to a small increase in petro-product prices.

Sources said that the Left parties, both CPI and CPM have agreed on a nominal price hike in petrol and diesel.

Apart from left parties, Aiyar held consultation with other allies including DMK, RJD and LJP to get an approval on the price hike.