Ofgem announced on Thursday that the new energy bill price cap will rise by 54 per cent per cent from April.

It means energy prices will rise by £693 a year for millions of households after regulator Ofgem hiked the price cap on bills to £1,971.

Chancellor Rishi Sunak has said the vast majority of households will receive £350 of support to remove the “sting” from the energy crisis through council tax rebates for households in bands A to D and an upfront discount on bills.

The Government will “step in” to help households directly manage “incredibly tough” energy costs, the Chancellor said.

Rishi Sunak said: “The energy regular Ofgem announced this morning that the energy price cap will rise in April to £1,971, an increase of £693 for the average household.

“Without Government action, this could be incredibly tough for millions of hardworking families. So the Government is going to step in to directly help people manage those extra costs.”

Government pledge £350 support amid energy bill rise

Chancellor Rishi Sunak told MPs: “The price cap has meant that the impact of soaring gas prices has so far fallen predominantly on energy companies, so much so that some suppliers who could not afford to meet those extra costs have gone out of business as a result.

“It is not sustainable to keep holding the price of energy artificially low. For me to stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest.

“But what we can do is take the sting out of a significant price shock for millions of families by making sure the increase in prices is smaller initially and spread over a longer period.”

The Chancellor said those eligible will get a £150 discount on their council tax bill in April, and a further rebate of £200 in October off their energy bills.

The £200 rebate will be repaid over five years in instalments of £40, Mr Sunak told MPs in the House of Commons.

The chancellor said the plan will provide 28 million households "with at least £200" and "tens of millions of hardworking families" will have "£350 more in their pockets".