Maximum payments will now be £4,000, the government has said.
The government's announcement that it will increase its Warm Front grants has been cautiously welcomed by an energy expert.
Jonathan Stearn at Consumer Focus said that the decision to increase the payments from a maximum of £3,500 to £4,000 would assist some vulnerable households. However, the expert also warned that others would "lose out" on the loans - as the rise in grants is not matched by a rise in overall government funding of the plan.
Warm Front pays low-income "fuel poor" households struggling to pay their gas and electricity bills to undertake energy efficiency improvements in their homes. This brings heating costs down over the long term.
However, the scheme, launched in 2000, has proved controversial - with some recipients complaining that they have been left out of pocket after having to "top up" the grants, as they were not large enough to pay for all the improvements. The government's decision to boost the maximum payment comes partly in response to these complaints.
Mr Stearn said: "This welcome increase to the Warm Front grant will help many of the poorest customers who have previously dropped out of the scheme because they could not afford the top-up fees needed. However, many vulnerable consumers will still lose out."
The decision on the grants was included in chancellor of the exchequer Alistair Darling's Budget speech, delivered to parliament earlier this week.
Government funding for Warm Front hit £350 million in 2007/08. Funding for 2008/09 stands at £395 million.
