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The energy regulator will reveal this morning the extent of the additional financial pain households face through its revision to the price cap.

Ofgem is expected to confirm a rise from 1 April of up to 50% – about £700 – taking a typical annual bill for gas and electricity up towards the £2000 mark.

However, the government is expected to strip away some of the additional burden through a package of measures that will include a rebate worth around £200 for every household and additional help for the worst off through the benefits system and Warm Homes Discount.

The price cap, which has shielded 22 million direct debit bill-payers and 4.5 million pre-payment meter customers from the worst of the surge in wholesale gas costs since last summer, has been blamed for the collapse of more than 25 suppliers who could not pass on the price.

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3:47

Energy price cap could rise 50%

The cap was raised by 12% in October but that failed to account for the bulk of the additional costs being demanded for natural gas across Europe.

The cap currently stands at an average £1,277.

A leap of almost £700 from April will coincide with a rise in National Insurance contributions and council tax bills – intensifying the squeeze on household budgets at a time when inflation is already at its highest level for nearly 30 years.

More on Cost Of Living

The charity National Energy Action has warned that the rise in energy bills will tip an additional 1.5 million homes into fuel poverty – leaving six million in total. That is one-in-five UK homes.

Data from the Office for National Statistics this week suggested that millions are already adjusting their energy use.

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1:00

Energy boss urges bill help for poorest households

What aid is the government planning?

It is understood that to help households, chancellor Rishi Sunak will reveal at a Downing St news conference later on Thursday that the government will provide billions in loans to energy firms so they can lower bills by around £200 per home.

Those loans would then be recouped at a later date, once energy prices fall back.

The idea is that the load placed on bills is spread further down the track but the market currently sees at least another 18 months of above-average energy costs, threatening to keep energy bills higher for years.

The Ukraine-Russia dispute is among the complicating factors as Europe relies on Russia for over 40% of its gas supply.

An energy industry source told Sky News: “It’s welcome to see Treasury plans to offer support for customers alongside the price cap announcement, as this is what many have called for to deal with the gas price crisis – but the devil is in the detail.

“The government hasn’t yet shared their thinking, so we don’t know if any support package is enough, or if it can be delivered effectively. Here’s hoping it’s a well-thought through package of measures and good news for customers.”

The Bank of England has consistently said it can do nothing to control energy costs but it is expected to take greater action on Thursday lunchtime to control expectations that higher inflation could result in spiralling wage levels.

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2:53

Inflation matches 1992 peak.

Economists and markets say the Bank, which first raised Bank rate from its COVID crisis low of 0.1% in December to 0.25%, will take the level to 0.5%.

Natalie Hitchins, head of home products and services at the consumer group Which?, said of the government’s apparent aid plan: “With the cost of living increasing at an alarming rate, a rebate would be welcome news for consumers facing huge increases to their energy bills.

“If this financial help is to be channelled through energy companies then it’s important that they ensure this is passed onto customers as swiftly as possible.

“It’s encouraging that there are plans to give more help to those who need it through benefits or warm home discounts.

“However, it’s vital that there are targeted plans to give more financial help to those who need it the most.”

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