Public sector net borrowing in September, excluding the nationalised banks, was £4.1bn - £800m less than in the same month past year.
According to the Office for National Statistics, a small drop in corporation tax receipts and a decline in stamp duty on the sale of homes was offset by a rise in income tax payments and VAT receipts, driven by the World Cup and summer high street spending.
The lowest September borrowing for 11 years, economists had been expecting a figure of £4.5bn.
The drop had the effect of cutting the level of borrowing since April to £19.9bn, which is £10.7bn less than in the first five months of the 2017 financial year.
Public sector net debt, excluding public sector banks, now stands at £1,789.5bn, equivalent to 84.3% of GDP.
Heavy restrictions on Whitehall spending, on both day-to-day running costs and investment, and a drop in interest payments on government debt, also played a part in helping Hammond reverse August's shock rise in borrowing, when it grew by £2.4bn to £6.8bn compared with the same month a year ago.
"The public finances have continued to improve rapidly this year, enabling the chancellor to accommodate plans for higher NHS spending without raising other taxes or cutting spending in other departments more aggressively over the next couple of years", Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics, said. Hammond has said he will explain how this will be funded in his budget statement.
Yael Selfin, chief economist at KPMG UK, said the government had to work out how to make the best use of the available resources.
She added: "However, the extra pot is unlikely to be sufficient for all these demands, and the chancellor will ultimately need to opt for either higher debt or higher taxes in order to meet these".