The company's announcement comes soon after Chancellor of the Exchequer Gordon Brown laid out the future for alternative fuels over the next three years in the Budget last month.
His announcement was not as potentially damaging as many in the industry had been expecting but it still prompted some to voice fears that the death knell had been sounded for alternative fuels.
The Government will reduce the duty differential in favour of liquefied petroleum gases by the equivalent of 1p per litre for each of the next three years until 2007.
The rise is equivalent to an increase of 2.42p per litre in 2004/2005.
Currently, the price of LPG is half that of petrol and diesel, so the impact of the duty rises is not expected to be as bad as first predicted when it was thought there would be much larger hike in duty.
Putting its faith in the future of LPG, Vauxhall said it would continue, and expand, production of its range of dualfuel cars and vans.
The company believes the fuel duty regime announced in Gordon Brown's budget showed the Government remains committed to 'green' fuel over the next few years.
'We have evaluated how the continuing duty differentials will affect potential users of LPG vehicles and have concluded that the duty level will still be favourable on both a cost and environmental basis compared to petrol and diesel,' said Ian Blinder, Vauxhall manager, special vehicles.
Vauxhall's current dualfuel vehicle range includes the Corsa, Astra, Zafira and Vectra car range and Corsavan, Combo and Astravan light commercial vehicles. The current range of LPG 1.2-litre, 1.6-litre 8-valve and 1.6-litre 16-valve and 1.8-litre engines is to be modified early next year to include the 'environmentally-friendly' 1.2-litre and 1.4-litre fuel-saving Twinport engine in the new Astra and Combo.
Blinder added: 'The Budget announcement last month brought to an end the damaging uncertainty which had existed in the market place for several months and which was badly affecting orders.
'But the vote of confidence the chancellor has given to the environmental and economic benefits of the fuel will now allow customers to plan for the future with confidence,' Blinder said.
'Now we can confidently expect a resurgence in orders from the growing number of fleet users.'