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Homeowners are being urged to invest in cavity wall insulation in return for up to £100 off their council tax bill.

The insulation costs around £175 to install, but the Department for Environment, Food and Rural Affairs (Defra) explains even without the rebate this would soon be covered by the energy saved every year.

Environment minister, Elliot Morley, is therefore appealing to people's pockets as well as their concern for the environment in a bid to cut carbon emissions.

"In a period of high energy prices, it is an opportunity to make major savings," he said.

For example, the department has also calculated that around a third of the cost of heating is wasted owing to poor insulation. If wall insulation is added, people could save an extra £110 a year thanks to increased efficiency.

The council tax rebate scheme is being put to the test in 16 local authorities, where if all 880,000 homes take part carbon dioxide emissions could be cut by 193,000 tonnes.

The insulation will be installed by British Gas, which estimates that 25 per cent of all carbon dioxide pollution comes from households.

And the money saved could be put towards cheap home insurance, protecting your personal property from potential damage as well as helping the environment.