Millions of homeowners and renters will see their gas bills rise to around £1,000 a year when British Gas increases its gas and electricity prices in the coming weeks.

British Gas, the largest domestic power supplier which has some 11 million customers, intends to hike its prices by 25 per cent, leading to fears that other companies will quickly follow suit and plunge thousands more into 'fuel poverty'.

The elderly and those on low incomes could consequently be forced to spend around ten per cent of their money on energy.

Gas and electricity prices jumped by 14.2 per cent last year following an 18.3 per cent rise in gas in 2004 and a 15.3 per cent increase in electricity.

Energywatch, the industry watchdog, said that the average gas and electricity bills came in at £750, which a 25 per cent price hike would push to around £1,000.

Around 1.5 million households in the UK are currently in fuel poverty - where fuel bills account for more than ten per cent of the income. But this figures is expected to rise to 1.75 million this year and 2.3 million by 2007 if the increases go ahead.

Ann Robinson, a uSwitch director, said: "There is insufficient justification for such excessive price rises. We will be looking to Ofgem to step in and investigate the reasons for these increases and verify that they are legitimate."

Last month saw steep increases in the cost of gas and electricity from Scottish and Southern and npower.