The “Green Deal” will also cover commercial premises and be funded by companies paying up-front to insulate buildings then recovering their money from resulting savings in energy bills.

Huhne said: “By stopping this waste, we can make big savings on bills, and use them to pay businesses for the cost of insulation.

“This is the Green Deal, which I will be introducing through Parliament before the end of the year. Companies will pay up-front to insulate your home, recovering their spending from the energy savings that will result.”

Huhne hopes the initiative will create a whole new industry and create 250,000 jobs.

He is confident the measures will be more successful than Labour’s insulation programme which he dismissed as “half-cock.”

Leaders of the UK Green Building Council welcomed the news and highlighted schemes like Keepmoat’s Daneville Estate scheme in Liverpool which has achieved 74% reductions in carbon emissions slashing tenants’ fuel bills from an average of £836 a year to around £236 per year.

John Alker, Director of Policy & Communications at UK-GBC said: “The Green Deal could drive a refurbishment revolution in the UK.

“There are examples right here in Liverpool that show what can be done when you go beyond just the cheapest measures and deliver a comprehensive package of low carbon refurbishment.

“Not only does it achieve deep carbon emissions, it can drive down energy bills, create new green jobs – and reinvigorate whole communities when energy efficiency is part of neighbourhood renewal.”