The energy price cap will be frozen at £2,500 until 2024 - saving the typical household around £1,000 a year, Liz Truss has announced.
The new prime minister unveiled the package - which applies from October 1 and is expected to cost up to £150 billion - in the Commons on Thursday.
Her plan means the annual household energy costs will no longer soar from the current level of £1,971 to £3,549 next month.
Instead, household bills will now be limited to £2,500 with consumers also receiving a £400 rebate announced in May by former chancellor Rishi Sunak. It means costs will be similar to those faced today.
The new “energy price guarantee” will limit the price suppliers will be able to charge customers for units of gas. It takes into account temporarily removing green levies from household bills which are worth around £150.
Truss also made a controversial announcement that the ban on fracking in England will end, meaning production of domestic shale gas could begin in as little as six months.
Businesses and organisations such as schools - which are not protected by the energy price cap - will see equivalent support for six months.
After that there will be ongoing support for the most vulnerable industries, with a review in three months’ time to decide where the help should be targeted.
Truss also said a fund would be set up for those using heating oil, living in park homes, or on heat networks.
The PM told the Commons her plan will “curb inflation and boost growth” and added: “This is the moment to be bold. We are facing a global energy crisis and there are no cost-free options.”
Today’s package will be funded through increased borrowing after Truss rejected calls to impose a windfall tax on energy companies.
The decision to borrow - when interest payments on government debt are rising - has opened up a clear dividing line with Labour.
Keir Starmer wants a freeze on energy bills to be funded by a levy dubbed a “windfall tax” on producers who have enjoyed bumper profits as a result of high global market prices.
Starmer said Liz Truss’s plan “does not come cheap” and the refusal to fund it with a windfall tax showed she was “driven by dogma” and “it’s working people who will pay for that”.
Yesterday the pound fell to its lowest level against the dollar since 1985 amid concerns about energy support and a surge in the value of US currency, but regained ground later in the day.
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