Mr Hunt said: "British Gas can retain their Charter Mark provided that they get their performance back on track."
The high-profile warning follows reports of soaring complaints about the company to the Gas Consumers Council. It is the latest in a series of public relations fiascos for British Gas since the end of last year when it emerged that the company had awarded its chief executive, Cedric Brown, a 75 per cent increase in basic pay.
Yesterday British Gas admitted that calls from customers have doubled to 500,000 a week, causing the company to increase by about 800 the number of employees handling customer queries. Many of the calls concerned the decision to give 5 per cent discounts to customers paying by monthly direct debit. This was criticised by some consumer groups as discriminating against people who could not pay by direct debit but always paid on time.
British Gas is restructuring in preparation for competition in the domestic gas market, starting next year, and this is widely viewed as the main reason for falling service standards.
Ian Powe, director of the GCC, said: "Intervention by the Prime Minister's Citizen's Charter office, his custodian of public service standards, shows how unwise British Gas was to cut corners in customer care while so hurriedly preparing for the competitive market. We shall do all we can to help Briitsh Gas restore its reputation for excellent service."
Mr Hunt said: "British Gas have assured me that their aim is to re-establish their reputation for excellence as quickly as possible and that their new structure will ultimately enable them to be more responsive to customers."
The company has agreed with the minister to increase training for staff dealing with customers, empower staff to make amends where needed and set up more telephone lines to ensure that 90 per cent of all calls are answered in 30 seconds or less.
More staff and weekend working will be used to clear up the backlog of telephone inquiries and correspondence.
In spite of the Government's concern, Mike Alexander, managing director of British Gas Public Gas Supply, denied any fall in overall standards. He said: "There is no reason why British Gas should lose its Charter Mark. In 1994 we maintained the standards achieved in 1993 which, at the time, the Gas Consumer's Council said were excellent."