The cost of car and motorcycle theory tests will fall by £6 in October to £25, with a further cut of £2 a year later.
The Driver and Vehicle Standards Agency (DVSA) said that it had negotiated new contracts with the test providers, and would pass on the savings to drivers.
Some tests for lorry and bus drivers, and driving instructors will also fall.
The practical car test still costs £62 on a weekday, and £75 in the evening after 16:30 and during weekends.
Motorcycle practical tests cost £75 for the on-road test, and £88.50 during evenings, weekends and bank holidays. The off-road element costs £15.50.
The government said that there would not be any change to the content of the cheaper theory test.
"This has been achieved without compromising on the vital role the theory test plays in making sure that new drivers know The Highway Code and the rules of the road," said Transport Minister Stephen Hammond.
"I am delighted that theory tests will now offer better value for money while continuing to meet these rigorous standards."
The theory test is only one of number of costs faced by learner drivers. The saving is the equivalent of about a quarter of a typical lesson.