The plans include a scheme which allows people to borrow money and spread their repayments over 30 years – longer then the traditional mortgage term - in order to keep the monthly repayment costs down.

The Department of Energy and Climate Change (DECC) says the scheme, called ‘pay as you save’ will allow green-minded homeowners to pay for environmentally friendly home improvements from the savings they make on their energy bills as a result.

It believes that installing solid wall insulation and upgrading to modern heating systems can slash a household’s energy bills by up to £380 a year.

However, as solid wall insulation alone can cost around £8,000 per property, the DECC has been in discussions with financial services providers to devise a practical way to help people fund their eco-improvements.

The government says energy companies will pay for two thirds of the nationwide upgrades and will pay penalties if they don't meet targets or they put up their bills to offset the payout.

It claims that homeowners won’t have to borrow more money every time they move because the debt will be passed on with the home not the borrower, according to the 'warm homes, greener homes' report.

Andrew Watkin, head of energy at property consultancy, Carter Jonas, says:

"Interestingly, the scheme will see the loan attached to the house rather than the person who took it out, which is fine so long as the technology that has been installed, and the way it is installed, is to a suitable standard. If it isn't and there are problems down the line, there could be a minefield of issues as to who is responsible for what.

"The theory is good, the key now is the practice. It's essential that any potential schemes work both in terms of energy efficiency and payback."