MILLIONS of households will be plunged into fuel poverty with energy bills set to soar by almost £700, as the cost-of-living crisis spirals out of control.

Regulator Ofgem announced today that the energy price cap, which limits how much providers are allowed to charge, would rise by 54 per cent from £1,277 a year to £1,971.

Chancellor Rishi Sunak was forced to announce a £9 billion package to deal with rocketing energy bills now that average costs of heating will increase by £693 in April 2022 in England, Wales and Scotland.

The funding includes a £200 repayable discount on all energy bills and a £150 council tax rebate for the four in every five households in bands A to D.

Shadow chancellor Rachel Reeves said: “The Chancellor wants to load costs on taxpayers with a ‘buy now, pay later’ scheme while Labour will keep bills low with a windfall tax on North Sea oil and gas producers with booming profits.”

Mr Sunak told MPs that it was impossible to “artificially” hold down energy prices at the same time as giant energy company Shell were announcing a 14-fold increase in their pre-tax profits to £12bn.

Labour MP Bell Ribeiro-Addy said the energy companies’ position was clearly unsustainable, having between 2011 and 2020  “paid out £23bn in dividends — six times more than they paid in tax.”

The Bank of England also announced today that interest rates are rising to 0.5 per cent from 0.25 per cent and predicted inflation was on course to hit a 30-year high.

It also said prices are expected to climb faster than pay, which will add to the squeeze on already struggling households.

Ms Reeves said: “The government’s proposals will leave families in Britain paying hundreds of pounds more as a result of the breathtaking rise in energy prices.

“Labour would raise money to keep bills low through a one-off windfall tax on oil and gas profits, to support all households, with each typically getting £200 of their bills.

“Labour’s plan will get £600 to the lowest income households, while the Conservatives will only give £350.”

Trade unions and campaign groups roundly condemned the government’s plans.

TUC leader Frances O’Grady described the Tory plans as “hopelessly inadequate” and “for most families it’s just £7 a week and more than half to be paid back. The best way to help families is to get wages growing again.”

Unite general secretary Sharon Graham said: “The energy price cap rise will turn the cost-of-living crisis into a catastrophe for millions of people.

“This will plunge at least one in four families in Britain into fuel poverty.”

Unison leader Christina McAnea said the government was relying on high energy prices being temporary and this “was a gamble that almost certainly won’t pay off’” while GMB said the measures were “a sticking plaster on a gaping wound.”

Simon Francis of the End Fuel Poverty Coalition said: “Today’s catastrophic price cap rise will force hundreds of thousands more households into fuel poverty from April.

“The government’s proposals for support will do little but offset or defer part of the most recent rise.

“The reality is that fuel poverty has been increasing at an exponential rate and only a full package to support people — especially the most vulnerable — will be sufficient in the short term.

“Longer term, the government must come good on its promises to help transform housing into safe, warm, energy efficient homes.”

Despite acknowledging the cost-of-living crunch, PM Boris Johnson insisted the rise in National Insurance had to go ahead in April to fund addressing the “colossal” NHS backlog.