Energy firms are believed to be close to finalising a £1 billion deal with the government over ways to improve energy efficiency in people’s homes.

An announcement on the three-year agreement, which has been the result of weeks of talks, is expected later this week.

It is expected to include plans for the installation of loft and wall insulation to increase domestic energy efficiency, alongside targeted financial advice for those suffering most as a result of high global energy prices.

The move comes amid intense debate over calls for a straightforward windfall tax on the “big six” energy firms.

Arguing fervently in favour of such a move at the TUC conference in Brighton yesterday, Tony Woodley of skilled workers’ union Unite said the government had “swallowed hook, line and sinker” the sector’s “heartless excuses”.

Unions claim gas and electricity companies have increased their profits from £557 million in 2003 to over £3 billion today. With prices raised by up to 35 per cent this year alone, they argue too many are being pushed into fuel poverty as a result.

Chancellor Alistair Darling addressed such concerns during his coldly-received speech to the TUC, in which he said “energy companies must face their responsibilities to help people in this difficult period”.

“We’ll do more. And they must do more,” he told conference delegates.

“Soon we will announce how we will help people reduce their energy bills this winter – and every winter. Millions of homes to benefit, and thousands of jobs to be created, from becoming a more energy-efficient society.”

With less than two weeks to go before prime minister Gordon Brown makes his crucial leadership speech at the Labour conference in Manchester, a well-received deal could help maintain the momentum of his premiership’s relaunch begun with a series of housing measures announced last week.

Speaking at a dinner event at the TUC conference last night, Mr Brown said: “We need to respond with courage and vision to the new insecurities facing hard-pressed, hard-working British families.

“Because while the global changes happening all around us are complex, the instincts they summon up in people are not. In tough times, people are understandably anxious.”