Thousands of households will be able to apply for vouchers giving them £400 off the price of a new boiler under a “scrappage” scheme to cut carbon and help people save money on bills.Up to 125,000 households with working boilers with the lowest “G” rating in England can apply for vouchers from the Energy Saving Trust towards “A” rated boilers or renewable heating systems such as a biomass boiler or heat pump.

The Government said the £50 million scheme will save as much carbon as taking 45,000 cars off the roads and will also cut a household’s energy bill by up to £235 a year.

The average cost of a boiler and its installation is around £2,500, according to the heating industry.

Some energy companies are planning to complement and even match the Government offer with money-off initiatives for upgrading to more efficient boilers - so that more householders can take advantage of the scheme.

The Government said the programme would also help sustain work for the 130,000 installers and 25 boiler manufacturers in the UK during the recession.

Prime Minister Gordon Brown, who is launching the scheme with Energy Secretary Ed Miliband on Tuesday, said: “Today’s announcement will slash household energy bills and carbon emissions while providing an important boost for the British heating industry.

“The Government’s new scrappage scheme will help to secure 250,000 jobs across the tens of thousands of small and medium businesses involved in boiler manufacture, sales and installation that form a vital component of Britain’s low carbon economy.”

Mr Miliband said: “The boiler scrappage scheme will save around £200 off heating bills per year for families that are replacing their old boilers, and in total will save the same amount of carbon equivalent to taking around 45,000 cars off the road.

“The scheme will add to the existing package of Government measures to help householders be smarter about the energy they use, leading to permanently reduced fuel bills and cutting emissions.”