Under the new standard the supply of new homes is likely to increase

A plan to make all new homes “zero carbon” from next year has been abandoned by the government in a move which house builders say will save the average buyer £2,500.

Builders will no longer be forced to install solar panels, heat pumps and other measures to reduce the need for new homes to use fossil fuels.

George Osborne, the chancellor, also cancelled plans to require builders to offset carbon dioxide emissions from new homes by paying for reductions elsewhere, such as insulation for existing homes or LED street lighting.

The Home Builders Federation welcomed the announcement, saying that the offsetting and renewable energy measures needed to meet the zero- carbon homes standard would have cost about £2,500 per home, which would have been passed