A new boiler "scrappage" scheme to help 125,000 households replace their old boilers with new, more efficient models was among a series of green measures in the Pre-Budget Report today.
Chancellor Alistair Darling said the programme, similar to the trade-in scheme for cars, would enable the installation of more efficient boilers for heating and hot water in houses to cut greenhouse gases and domestic bills.
He also announced that householders with wind turbines or solar panels on their homes who feed excess power back into the grid would receive an average of £900 a year under the "feed-in tariff" scheme which starts in April - a payment which would be tax-free.
And an extra £200 million would go to helping people make their homes more energy-efficient through measures such as insulation, supporting an additional 75,000 households.
"We must all become more energy-efficient and cut emissions, as well as household bills," he said.
The Chancellor also pledged investment in the low-carbon sectors such as wind power, and said the Government would double its commitment to carbon capture and storage - supporting four new power stations with the technology which captures CO2 and store it permanently underground.
He said the current UN climate talks in Copenhagen were a "historic" attempt to secure a new global deal on tackling climate change.
And he said addressing global warming would bring "opportunities for new low-carbon industries" and create high-skilled, highly paid jobs.
The extra £200 million for energy efficiency measures includes £150 million to help 75,000 of the most vulnerable households through the Warm Front scheme and £50 million to fund the greener boiler incentive.
The Chancellor said old inefficient boilers wasted around £200 on the average household bill and put an extra tonne of carbon in the atmosphere each year.
The scrappage scheme will provide £400 for people to help them replace old-style boilers with a new condensing boiler which would be more efficient.
A recent study by the Corgi Trust estimated that a scrappage scheme which gave people incentives of up to £500 to replace their existing boilers with the more energy efficient ones could deliver average savings on bills of £156 a year, almost a quarter of their total costs for heating and hot water.
But Ian Parrett, analyst with independent energy consultants Inenco, said the Government would need to offer stronger incentives for people to change their boilers.
"There is a stark contrast from the car scrappage scheme," he said.
"People are much more prepared to make financial sacrifices to swap their old car for a shiny, new model, but nobody is going to try to 'keep up with the Jones's' with a new boiler.
"It is the last thing many people want to spend money on, especially in the current economic climate."
And Greenpeace's executive director John Sauven said the speech included a few tax breaks and lots of rhetoric, but words alone would not build a low carbon economy.
"Alistair Darling peppered his speech with references to a low carbon economy, but failed to announce the scale of change that would actually give us one.
"A bold Chancellor would have scrapped Trident, saved £100 billion and used the cash to create a green investment bank.
"This would help British companies invest in clean technology, and bring thousands of new jobs and much needed energy security to the UK," he said.