HOUSEHOLDS will avoid up to $100 million in power bill increases next year because a green scheme is being axed early.

The Gillard Government said it would phase out its solar credits multiplier in January, six months ahead of schedule, because a massive surge in panels fitted to roofs was driving up electricity costs.

The multiplier effectively provides double payments for solar energy created by homes with photovoltaic panels.

But Climate Change Minister Greg Combet said households had borne the brunt of those payments, through higher power bills, and the multiplier should be scrapped early.

"This will lower the impact of the high uptake of solar PV on electricity costs for homes and businesses," Mr Combet said.

"Phasing out the multiplier early will strike the balance between easing upward pressure on electricity prices and supporting households and suppliers who install solar PV. The overall reduction in 2013 electricity bills is estimated to be in the order of $80 million to $100 million."

Opposition environment spokesman Greg Hunt said the Government had "finally admitted its solar phantom credits scheme has driven up electricity prices".

"The Coalition warned the Government for over three years that the creation of so-called 'phantom credits', where people were paid for solar energy they didn't generate, would drive up the cost of the scheme for everyone else," he said.

He said the decision to scrap the multiplier was welcome but "does nothing for the current high power bills which people have just paid this quarter".

Australian Solar Council chief executive John Grimes hit out at the decision, saying it had left the industry in a state of chaos.

He disputed Mr Combet's assertion that solar was driving up electricity bills, saying it would bring down generation costs and help ease demand on hot summer days.