Environment, sustainability and housing minister Jane Davidson said that the scheme will come into force on April 1st 2010, with £2.5m allocated to the scheme allowing up to 5,000 homes to benefit.

The scheme will reward households with a £500 voucher towards the cost of a new A-rated boiler when they replace their old G-Rated one. The switch can also save households up to £235 a year in energy costs as well as reducing greenhouse gas emissions.

Consumer watchdogs have claimed that the scheme would not help the long term sick, young families and the disabled, but Ms Davidson also announced “an additional £1.4 million to tackle fuel poverty through our Home Energy Efficiency Scheme during the next financial year.

“This additional funding underlines the Assembly Government’s ongoing commitment to tackling fuel poverty and reducing greenhouse gas emissions in Wales.”

Vale of Clwyd Labour AM Ann Jones said: “This boiler scrappage scheme will save hundreds of pounds for many householders who are currently suffering from fuel poverty.”