More than 800,000 extra homes could benefit from the Government's energy saving and insulation scheme as it will be extended for a further two years, Energy Minister Amber Rudd said.

The Energy Company Obligation (ECO) scheme, which is delivered by major suppliers, will continue until March 2017, Ms Rudd announced.

Ministers hope the scheme will now reach an extra 840,000 homes.

Ms Rudd said that alongside the Green Deal, over a million homes have been helped by Government energy efficiency schemes.

The Tory minister told MPs: "The latest DECC official statistics show that we are getting closer to reaching our target of delivering energy efficient measures to one million homes.

"As (Energy Secretary Ed Davey) has said we have already reached one million measures.

"In addition legislation came into force in early December to help simplify the scheme and reduce costs.

"This has enabled energy suppliers to cut energy bills by £30-35 this year.

"The scheme will also be extended from March 2015 to March 2017 to provide greater industry certainty and enable us to reach an additional 840,000 homes."

The scheme is designed to help poorer families in receipt of benefits or tax credit.

But Labour's Nic Dakin (Scunthorpe) said over half the money spent on ECO was not helping people in fuel pvoerty.

He said: "With over two million people still in fuel poverty sadly why is over half the money spent on this scheme going to people who aren't in fuel poverty?"

Ms Rudd replied: "Can I reassure you that the changes to ECO clearly did not change at all the targets to help vulnerable people.

"Even though we made the changes to reduce the amount on the bills, we have continued to focus on vulnerable people and we will continue to keep that as a priority."