The government hopes to start up 14 billion pounds of private investment by 2020 to insulate draughty homes and reduce energy bills that have seen fuel poverty rates more than double since the start of the last decade.

Energy and Climate Change Secretary Chris Huhne set out plans to attract investment to help meet Britain's ambitious energy saving goals, under a new scheme proposed in his annual energy statement to parliament.

Policies to increase efficiency and boost participation in renewable technologies will save households about 94 pounds, or 7 percent off their annual utility bill, Huhne said, citing figures from his Department of Energy and Climate Change.

Under his Green Deal, the mass rollout of energy saving measures would cut fuel consumption, reduce monthly energy bills and protect households from rising global energy prices, he said.

On top of that, Britain's six dominant energy companies, which supply 99 percent of homes, will provide an additional 1.3 billion pounds for vulnerable and hard-to-insulate dwellings, Huhne said in his speech.

The Green Deal is about putting energy consumers back in control of their bills and banishing Britain's draughty homes to the history books, he said after noting that fuel poverty rates doubled between 2001 and 2009.

Fuel poverty is defined as any household that spends 10 percent or more on energy bills.

The scheme could create at least 65,000 insulation and construction jobs by 2015, he added.

Environmental groups say the government's prescription for tackling rising energy bills is bound to fail because it ignores the primary cause of the latest round of hikes: fossil fuels.

Our energy bills are rocketing because the big six power companies are keeping us hooked on expensive imported gas, Friends of the Earth's energy campaigner Paul Steedman said.

In the last decade Britain switched from being virtually self-sufficient to this year importing more gas than it produced, increasing dependence on foreign suppliers.

In a bid to keep a lid on domestic energy prices the UK must cut its exposure to international markets by promoting renewable investment at home, Steedman adds.

The UK's Carbon Trust said the government should incentivize energy efficiency measures by giving tax breaks to companies and organisation which cut consumption.

Labour's Shadow Energy and Climate Change Secretary, Caroline Flint, dismissed the scheme as ineffectual and accused the Huhne of being afraid of standing up to vested interests.

(Reporting by Oleg Vukmanovic; editing by Keiron Henderson)