The government will extend the Energy Price Guarantee at current levels for a further three months in Wednesday’s Budget, as it seeks to boost growth.
Typical household energy bills had been due to rise to £3,000 a year from April, but instead the cap will be kept at £2,500 until the end of June.
The chancellor is due to set out a broader plan later to grow the economy.
UK economic growth has flatlined in recent months and the Bank of England expects a recession to start this year.
The government has been limiting energy bills for a typical household to £2,500 a year, plus a £400 winter discount.
That help was set to be scaled back from 1 April, and the £400 discount is also coming to an end. Many had warned this would heap hardship on families already struggling with the cost of living.
However, campaigners had urged the government to change course, pointing out that falling wholesale energy prices have sharply cut the cost of offering support.
Chancellor Jeremy Hunt said: “High energy bills are one of the biggest worries for families, which is why we’re maintaining the Energy Price Guarantee at its current level.
“With energy bills set to fall from July onwards, this temporary change will bridge the gap and ease the pressure on families, while also helping to lower inflation too.”