A radical new way of pricing ferry fares to Scotland's islands, designed to achieve massive cost reductions, is to be tried first on at least one of the routes to the Western Isles.

It should mean that taking a car from Ullapool to Stornoway, Skye to Harris and North Uist, or Oban to Barra and South Uist, will cost no more than driving on a road of the same distance.

Ministers hope that a Road Equivalent Tariff (RET) scheme, which has been in force on Norwegian fjords for some time, could provide an enormous economic boost to island communities which have to bear high transport costs.

At present, it costs £229 for a car with driver and three passengers to make a return trip on the Caledonian MacBrayne Ullapool to Stornoway ferry, a total journey of around 100 miles. In a car, this could cost significantly less than £30 if only fuel costs were included, although the details of the RET equation have yet to be established.

In Stornoway yesterday, John Swinney, Cabinet Secretary for Finance and Sustainable Growth, announced details of the preparatory work required before an RET scheme could be introduced to the Scottish ferry network, The first step is to be a study by consultants Halcrow to establish the most effective and sustainable structure for a pilot scheme. The benefits to islanders would be a fundamental part of this study.

Mr Swinney said ministers recognised the vital importance of lifeline ferry services and the genuine concerns in remote and fragile communities about costs.

"I believe the way forward is to consider the benefits of introducing an RET approach to setting fares in Scotland. This approach would not just benefit islanders by providing cheaper fares but could also boost island economies by attracting tourists and supporting businesses.

"We have moved ahead to fulfil our commitment to carry out a study into the benefits of RET. As part of that study, we will undertake a pilot scheme on one or more of the routes between the mainland and the Western Isles."

The study will initially make recommendations on the route or routes to be selected as a pilot, its duration, the fares to be charged, and provide a preliminary assessment of the potential costs and benefits. A report on options is due by the end of the year.

The work will be done on the costs and benefits if RET was applied on a permanent basis and rolled out to other ferry routes in the Clyde and Hebrides and the Orkney and Shetland networks and whether bigger vessels or more frequent services would be required to cater for demand.

The plan announced in March by Jack McConnell, the previous First Minister, to introduce a scheme giving island residents a 40% discount on ferry fares will now no longer proceed.

Donald Manford, Western Isles Council's chairman of transportation, said: "This announcement is a major step towards the introduction of RET for the islands. The end of the year deadline for the study is a significant move which will allow early delivery of an appropriate scheme. Reduced ferry fares through RET will provide an even playing field for the islands."