Britain's biggest energy supplier blamed the hike on the soaring wholesale cost of gas, which it said had been exacerbated by "anti-competitive" practices in European countries.
The independent watchdog, Energywatch, said the average bills for British Gas's 17 million accounts would rise to £628 for gas and £391 for electricity and urged customers to seek cheaper suppliers.
Consumer groups claimed the sharp increase would push thousands of elderly people into fuel poverty during wintry weather.
The rise - which takes effect on March 1 - means that British Gas's prices have risen by 70 per cent for gas and by 65 per cent for electricity since 2003.
"This is the most serious single event in two years of trauma for energy consumers," said Allan Asher, the chief executive of Energywatch. "British Gas is not only the biggest supplier, it has the greatest number of customers using pre-payment meters and the highest number of customers on the priority service register, who are the most vulnerable consumers."
The National Consumer Council warned: "Successive gas price hikes mean many poor and vulnerable consumers will have no option but to resign themselves to switching off the heating and going cold or going without other essentials, such as healthy food."
British Gas admitted that it knew of no larger increase in British history. The hike follows hefty but lower increases by two of Britain's other five big energy companies. EDF Energy, responsible for London Energy, Seeboard and SWEB, this week announced gas rises of 14.7 per cent and electricity rises of 4.7 per cent. Last week Scottish Power hiked prices by 15 per cent for gas and by eight per cent for electricity.
The remaining suppliers, Powergen, npower and Scottish and Southern, are expected to up prices in coming weeks.
British Gas is by far the biggest player in the market, with 11 million gas customers and six million electricity customers. It has 55 per cent of the gas market and 23 per cent of the electricity market.
British Gas said that, despite the rise, British consumers were paying substantially less than customers in Germany, France and Italy.
On Thursday, the European Commission and the UK regulator, Ofgem, said some European energy firms were holding back gas supplies, driving up prices of imports into Britain.
Mark Clare, the managing director of British Gas, said that while there could be "no guarantees" with such volatile wholesale prices, the company could not foresee further rises in 2006 providing new pipelines opened and action was taken to improve the European market.
Two million British Gas customers who have signed up for a price protection package will not be affected by the increase.
British Gas announced it was extending its price protection scheme to 2009 and would provide 300,000 "winter rebate" payments of £90 each for vulnerable customers on dual fuel deals.
Energywatch said British Gas's support for vulnerable customers was welcome but warned that thousands of customers would be forced into difficulty and urged them to shop around.
"More than half of Britain's 21 million gas users have remained loyal to British Gas but millions of customers may now choose to make the great escape and go elsewhere else to get a lower price," said Mr Asher.
"Other companies are raising their prices, but despite this, British Gas continues to be Britain's most expensive gas supplier.
"The £1,000 average energy bill has now reached Britain and energy prices are back to pre-competition levels."
Help The Aged said that every 10 per cent increase in bills pushed an extra 200,000 older people into fuel poverty, predicting that the rise would have "a wide effect" on vulnerable elderly people.Reuse content