INSULATING every home in the region - to tackle rising heating bills and climate change - will cost a staggering £300m, it was revealed today.

North-East councils told MPs that 500,000 homes required loft insulation and a further 450,000 were in need of cavity wall insulation.

Yet the government has failed to provide across-the-board grants for home energy efficiency improvements - leaving it up to councils and power companies to help.

Campaigners have complained that residents face a "postcode lottery", with some local authorities offering council tax rebates, while others refuse.

Meanwhile, they say, a typical grant towards loft insulation is as low as £2 - leaving homeowners with a bill for hundreds of pounds if they decide to act.

The £300m bill was revealed when the Association of North-East Councils gave evidence to a Commons committee investigating the impact of climate change on local government.

ANEC, which represents all 25 authorities in the region, also said it wished it had greater powers to stop residents paving over front gardens, which increases the risk of flooding..

And it admitted some North-East councils had not yet adopted a recommended 'carbon management programme', but did not say which.

On home insulation, Hilary Knox, ANEC's deputy director, said: "We need £300m to tackle fuel poverty. We have a lot of old housing stock - 450,000 homes require cavity wall insulation and a further 500,000 require loft insulation.

"One of the fundamental challenges in addressing climate change is winning hearts and minds, encouraging citizens and communities to make lifestyle changes which make a difference."

The numbers living in fuel poverty - when a household spends more than a tenth of its income on utility bills - is rising sharply, as energy suppliers push up their prices.

Last week, British Gas said it was increasing bills by 15 per cent, after EDF Energy and Npower raised prices by up to 27 per cent - which means two-thirds of British households will pay more.

In his last Budget, in March, then Chancellor Gordon Brown disappointed campaigners by saying he wanted all homes to be offered help on insulation, while offering no new money.

Last year, Energy Saving Trust Advice Centre, based in Billingham, said it wanted to properly insulate every home in the North-East by 2013.

It said installing adequate roof and wall insulation could cut heating bills by up to 60 per cent, but can only give free advice on available grants and suitable contractors.

Householders not eligible for financial help would pay around £350 for cavity wall insulation, the organisation said.