Vouchers of up to £5,000 per household will be available, and up to £10,000 for the poorest households.
The scheme is expected to be announced in tomorrow’s Summer Budget speech as part of a range of measures which aim to help the country get back on its feet after the coronavirus pandemic.
Under the Green Homes Grant, the government will pay at least two-thirds of the cost of home improvements that save energy.
For example, if a homeowner installed cavity wall and floor insulation for £4,000, the homeowner would pay £1,320 and the government would contribute £2,680.
About half of the fund will go to the poorest homeowners, who will not have to contribute anything to the cost.
The scheme will launch in September, with online applications for recommended energy efficiency measures, and details of accredited local suppliers.
Once one of these suppliers has provided a quote and the work is approved, the voucher will be issued.
Sarah Broomfield, energy spokeswoman at Uswitch, said: “The extra heating and electricity used during lockdown is predicted to add £195 a year to the average home’s bills.
“So the chancellor’s initiative to help hundreds of thousands of people make their homes more energy efficient couldn’t come at a better time – especially as energy consumption is set to hike as soon as the temperatures drop.
“It’s particularly important that half of the fund will focus on helping the poorest households, but it’s disappointing that those who rent their home will miss out.”
Sunak is also widely expected to use tomorrow’s speech to announce a stamp duty holiday to kick start the housing market.