Help for energy bills will be extended for a further three months from April to June at its current level, capping the typical annual household bill at £2,500.
The Energy Price Guarantee (EPG) had been due to rise to £3,000 in April and the cost of scrapping the planned 20% increase will amount to around £3 billion.
The Government says the move will save households £160 on average compared to if the guarantee had risen to £3,000 as planned - but households will still see energy bills rise as the £400 rebate is coming to an end, reports The Mirror.
READ MORE: Liverpool John Lennon Airport: 'Cheapest' destination with £2 beer and £56 flights
A full announcement is expected this afternoon when Chancellor Jeremy Hunt delivers his first Budget announcement.
The government plans to "bridge the gap" until falling energy bills fall below the level of the cap. By the time the EPG extension comes to an end, analysts at Cornwall Insight expect energy bills will fall below £2,500 anyway, at which point bills should start to reduce.
It’s important to remember neither the Ofgem price cap and Energy Price Guarantee set an absolute limit on how much you can pay for energy. Instead, each sets a limit on what you can be charged for units of gas and electricity, plus the daily standing charge.
The headline figures are used to illustrate what someone with typical usage can expect to pay over a year. This means you could end up paying more or less, depending on how much energy you use.
Prime Minister Rishi Sunak said: "We know people are worried about their bills rising in April, so, to give people some peace of mind, we're keeping the energy price guarantee at its current level until the summer, when gas prices are expected to fall.
"Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year."
Mr Hunt said: "High energy bills are one of the biggest worries for families, which is why we're maintaining the energy price guarantee at its current level.
"With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too."
Rocio Concha, Which? director of policy and advocacy, said: "People will still face an increase in energy bills when the energy bill support scheme comes to an end in April.
"However, keeping the energy price guarantee at £2,500 is an important step in the right direction which will offer a much-needed lifeline to families who continue to be battered by high inflation.”
A key element of the Budget is expected to be a package of measures aimed at removing barriers to work - with the childcare announcement a major part of that, as well as a move which will ease cost-of-living pressures.
The current provision of up to 30 hours a week of funded childcare in England for parents of three and four-year-olds is expected to be extended to also cover one- and two-year-olds. Action is also expected on prepayment meters with the Chancellor set to use the Budget to scrap so-called "prepayment premium" from July.
The Chancellor will also echo some of the language of Mr Sunak, with a promise of "harnessing British ingenuity to make us a science and tech superpower" as he sets out a road-map for the country's economic future.
But Labour has said that Mr Hunt's Budget speech is an opportunity for the Government to show some "real ambition" after years of "managed decline".
Shadow chancellor Rachel Reeves said: "This Budget is an opportunity for the Government to get us off their path of managed decline.
"It's a chance for them to recognise the huge promise and potential of Britain and get us growing again."
Ms Reeves, speaking ahead of the Budget, said: "With 13 years of economic mismanagement and sticking plaster politics leaving us lagging behind, what we need to see on Wednesday is some real ambition from the Government.
"Labour's focus would be on our mission to secure the highest growth in the G7. Our plan will help us lead the pack again, by creating good jobs and productivity growth across every part of our country, so everyone, not just a few feel better off."
READ MORE:
Man drugged schoolgirl and took her to a park to rape her
Backlash against Liverpool Council after Airbnb announcement
Thomas Cashman told police 'yous are stitching me up' after Olivia murder arrest
Liverpool John Lennon Airport: 'Cheapest' destination with £2 beer and £56 flights
