Prime Minister Kevin Rudd has confirmed the federal government will move to a floating price on carbon one year earlier than expected but says the details of where the money will come from are yet to be finalised.



Mr Rudd said the government wanted to make the change because it would ''take the cost of living pressures off Australian families and still act on climate change''.



However, the government has not released any details about what the exact amount the change in policy will mean for the budget bottom line.



It has not denied speculation the figure would be in the order of $4 billion and $5 billion.



The federal government has promised to keep the household compensation package.

''We have still got a lot of budget work to do,'' Mr Rudd said in Cairns on Sunday before leaving on a trip to Papua New Guinea.



Such a significant saving suggests the government would have to make significant cuts in order to deliver on its commitment to deliver a balanced budget by 2015/16.

Prime Minister Kevin Rudd: Moving to a floating price on carbon on July 1 next year Credit:ABC

Treasurer Chris Bowen earlier confirmed the federal government would stick to its timetable for the return to a balanced budget despite bringing forward changes to the carbon price worth billions of dollars.