The scheme, known as "feed in tariffs", gives long-term financial security to homeowners who instal the expensive electricity generation equipment. It has been highly successful in Germany but the Government is said to have held out against new rules for small-scale power generation since Labour was elected in 1997. There are more solar panels in the German city of Freiburg than in the whole of Britain.

The Government has now decided to embrace feed-in tariffs.

Malcolm Wickes, the energy minister, told an evidence session on the Energy Bill the Government is looking at new proposals to boost micro-generation - where homes and businesses produce their own electricity - including a feed-in tariff.

The Conservatives said the Government decision to consider feed in tariffs represented a massive U-turn. They also claimed it was a new example of Gordon Brown's government "stealing" a Tory policy, following decisions to raise the threshold of inheritance tax and pinch Tory plans for taxing flights not passengers. David Cameron announced the Tories' support for feed in tariffs at Greenpeace's offices just before Christmas.

Peter Ainsworth, the Tory front-bench environment spokesman, said: "This is a huge U-turn. I don't mind if the Government pinches our policies because it indicates that we are leading the debate on ideas for dealing with climate change.

"It is a pity that the Government has done nothing for 10 years when it could have come up with our policies. If they mean what they say it will transform the market for electricity generation in this country. The question is are they serious? Or are they just saying things that we said because they know they are right and popular?"

John Sauven, executive director of Greenpeace: said: "At last the Government is giving in to common sense. Feed-in tariffs have been proven the world over to be the most effective and economic way of creating a successful renewables sector.

"This Government has clung to a complex mechanism that costs more than feed in tariffs and delivers less. If we are to meet our commitments on renewable energy we will need this kind of low cost and effective support for clean technologies to really take off."

A spokesman for the Department for Business, Enterprise and Regulatory Reform said the proposals to create feed in tariffs for micro-generation would not affect large renewables schemes, which would continue to be funded by the Renewables Obligation, which ministers still considered "fit for purpose".

New EU targets state Britain must generate 15 per cent of its energy from renewable sources by 2020.