Gordon Brown faces a double revolt despite announcing a £1 billion package yesterday to help struggling households to cope with soaring energy prices.

The Prime Minister said that energy companies and generators had agreed to stump up £910 million to pay for all low-income and pensioner families to get free loft and cavity insulation, with six million others offered half-price deals. The measures were a “better alternative” to a windfall tax.

Families could save up to £400 a year from the help offered, ministers said. Mr Brown confirmed that the payments from the companies would be authorised by legislation to be introduced into the Commons shortly, insisting that he did not expect the cost to be passed on to the consumer.

That aspiration was immediately called into question when industry figures suggested that part of the bill always ended up with the customer.

One expert said that Britain’s middle classes would be forced to pay for the lion’s share of the funding package. Dieter Helm, Professor of Energy Policy at New College, Oxford, and a former Downing Street adviser, said that it was “completely naive” to believe that the money raised for the scheme from the Big Six power companies would not be passed on to consumers in the form of higher bills.

The announcement of a Bill was seized upon by MPs and pressure groups as meaning that Labour MPs would be able to table amendments calling for a windfall tax. The unions have also flagged such a tax as their priority for a debate at the Labour conference the week after next.

Mr Brown could be defeated at the conference but would be unlikely to lose in the Commons because the Conservatives would not back a windfall tax. Even so, the tax might be seen as a threat to the companies if they were found in any way to have passed on the cost of the scheme to consumers.

Mr Brown and John Hutton, the Business Secretary, also promised action against the companies if a current Ofgem inquiry into their pricing practices found unacceptable behaviour.

The package includes:

- Free cavity wall and loft insulation for six million pensioners and poor households

- 50 per cent off the cost of insulation for another six million households

- A freeze on this year’s bills for half a million poor consumers

- Cold weather payments to go up from £8.50 a week to £25 for pensioners, the disabled and families with children under 5 if temperatures drop below zero for seven consecutive days

The Government says that its aim is to insulate every home in Britain by 2020, and energy companies, councils and voluntary organisations will be making door-to-door visits in deprived areas to promote the scheme.

Mr Brown stressed that the moves were focused on reducing energy consumption. “Our objective is nothing less than a sea-change in energy efficiency and consumption, at the same time as helping the most vulnerable households this winter,” he told a Downing Street press conference.

The Prime Minister said: “We want to keep energy bills as low as possible and I do not expect the £910 million that we raise to be passed on to the consumer by the energy companies.”

That appeared to be contradicted by the Association of Electricity Producers, whose chief executive, David Porter, said: “Whenever people impose costs on an industry, the bill to some extent always ends up with the customer.”

Tony Woodley, joint leader of the Unite union, said that the moves were not enough and he would make the issue a central theme of the Labour conference. Alan Duncan, the Shadow Business Secretary, said that it was “not clear how this announcement will help the millions of people who will struggle to heat their homes this winter”.

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