Cuts to the energy efficiency programme - which requires companies to install new boilers and insulation - are threatening to undermine the Government's efforts to tackle "fuel poverty", MPs have warned.
The Commons Energy and Climate Change Committee said it had taken evidence that changes in last year's Spending Review to ease the burden on suppliers meant a reduction in spending on energy efficiency measures of more than £300 million a year.
Chancellor George Osborne said at the time that reducing the cost of "green" policies to the companies would lead to a £30 cut in average household energy bills, however the committee expressed "serious concerns" about the Government's approach .
"We heard that this reduced funding would seriously impact the ability of the proposed scheme to tackle fuel poverty (an issue closely linked to homes with poor energy efficiency standards) as there was still 'a big gap' between the Government's fuel poverty targets and the level of funding available to meet them," it said.
"The importance of tackling fuel poverty cannot be overstated. However, we have serious concerns that the Government's decision to use the new supplier obligation to do so may be misguided. The evidence we have received clearly indicates that this is the wrong approach.
"Moreover, given the huge number of homes yet to benefit from energy efficiency measures, the reduced ambition of the new supplier obligation is a major disappointment."
Overall, the committee said that the Government needed to do more to reduce consumer energy bills by improving the energy efficiency of new and existing homes.
A Department of Energy and Climate Change spokesman said: "We're spending nearly £1 billion a year on helping the most vulnerable out of fuel poverty. 12 million pensioners receive up to £300 every winter and we help the poorest by cutting £140 off their energy bills.
"But we know there is more to do, which is why we are requiring energy companies to help us make one million homes warmer by 2020."