Centrica – the owner of British Gas – announced its profits dropped 20 per cent to £992 million for the first half of the year.

Yesterday the firm announced a 35 per cent rise in its gas prices, despite making £5.42 million in operating profits a day.

Centrica chairman Roger Carr said the price hikes, putting average annual energy bills at £1,322, were necessary to “restore reasonable profitability in British Gas”.

The firm claimed domestic price increases were necessary given the rise in wholesale gas prices

Liberal Democrat leader Nick Clegg said the price rises of 35 per cent for gas and nine per cent for electricity would be “devastating” for many families, particularly the elderly and vulnerable.

“The announcement may have been made in a hot spell in July, but when winter comes round thousands will be forced to choose between heating their homes and cooking their meals,” he said.

“British Gas has thousands of customers paying fixed rates, but when those terms expire they will be hit with staggeringly high bills.”

He went on to call on the government to deal with the issue of high energy bills.

“Energy companies are benefiting from a £9 billion windfall yet continue to hike up their prices on the government’s watch. This is unacceptable,” Mr Clegg said.