Climate change secretary Chris Huhne demands that energy suppliers stop promoting compact fluorescent bulbs in DIY stores and supermarkets in order to prioritise insulation.
Power companies currently discount compact fluorescent bulbs in supermarket and large DIY chains in order to help meet greenhouse gas targets. However, under the new measures, the cost of energy saving bulbs could treble - jumping from the currently discounted 33p in supermarkets to more than £1.
Ministers issued a total ban on light bulb mail outs earlier this year but energy companies continued to subsidise low energy bulbs instore, with more than 330m energy saving bulbs sold to customers under the scheme.
Chris Huhne explained that the next period of the Government's Carbon Emissions Reduction Target (CERT) scheme, which will be extended from March 2011 to December 2012, will see the subsidies scrapped and force energy companies to use more conventional methods.
The Department of Energy and Climate Change (DECC) will also consult this summer on whether to retain the existing subsidy for low carbon gadgets like eco-kettles, shower regulators and high efficiency appliances in place of more homes being insulated - "paving the way" for the Government's new Green Deal.
The move is designed to priorities the insulation of UK homes, with energy suppliers now forced to spend money on promoting professionally installed loft, cavity and solid wall insulation.
According to Mr Huhne, 15% of homes helped by the new scheme will be the lowest income households - those that are more at risk of fuel poverty. He said: "Our plans will give a huge boost to the insulation industry during the economic recovery as we pave the way for the start of the Green Deal. This is the beginning of a massive and urgent increase in home energy insulation for the nation. We are demanding that energy companies work harder to make homes warmer, more environmentally friendly and cheaper to run, especially for those who need it most."
The minister added that some UK households could save as much as £550 a year by properly insulating their homes and that some 3.5m more homes across Great Britain are likely to benefit under the scheme. This builds substantially on the 2.5m homes treated under the scheme since April 2008.
Association for the Conservation of energy director Andrew Warren welcomed the move: "This decision provides an important step towards refocusing the long-standing energy efficiency obligations upon energy companies. It breaks new ground, by mandating a minimum percentage of investment for one specific energy saving option - in this case, insulation."
National Insulation Association chief executive Neil Marshall also commented on the announcement: "We welcome this bold move by Government and recognition of the critical role that insulation has to play in reducing energy bills and tackling climate change. The introduction of a minimum level of insulation that must be carried out by the energy suppliers along with other changes such as stopping the promotion of CFLs will ensure there is a major increase in the amount of insulation undertaken."