Millions of smart meters installed in British households under the Government's flagship scheme may need to be replaced due to an IT bungle.

For the first time major energy suppliers have admitted that some of the 8 million "first generation" smart meters fitted in households are incompatible with a new nation al communications network, which links their systems to the devices.

A row has broken out after the government last night denied that the meters would need to be replaced.

Estimates show a worst case scenario in which every smart meter has to be replaced would add as much as £100 to every UK household's energy bill, although sources said this was unlikely.

Meters not connected to the system "go dumb" when consumers switch energy suppliers to get a better deal, meaning they are no better than traditional meters as customers have to rely on estimated bills.

Under the Government's £11bn smart meter programme every household in the UK will have been offered a device by 2020. Energy suppliers which do not comply face heavy fines.