In one of her first acts as Prime Minister, Liz Truss is planning to freeze all household energy bills at around £2,500 a year.

A government source confirmed that the freeze could stop the planned energy bills hike of over £3,500 per household from 1 October.

The new Prime Minister plans to make a "major intervention" against Britons' soaring gas and electricity bills as soon as Thursday.

According to officials, the policy could cost as much as £100 billion over the next 18 months.

Energy bills in the UK are due to jump 80% from October to £3,548 a year for the average household. The jump is predicted to force many poorer families to choose between heating their homes and other basics.

Under the new plans drawn up by Truss and her team team, the old pricing regime will effectively be abolished and the energy regulator Ofgem will be sidelined for now.

Instead, ministers will set a new price that households will pay for electricity and gas.

Reports state that under Truss's plan, energy suppliers will be made to charge households a reduced rate for their energy and the government will guarantee financing that will cover the difference with what they would have charged under the previous system.

Originally, Truss had planned to extend the existing support package put in place by former chancellor Rishi Sunak from a £400 bill save per household to £1,000.

However, sources say that after lengthy discussions with her team, it was decided this would not be enough and she had to go further.