More than one in four homes in the UK will be offered a complete eco-makeover under ambitious plans expected to be announced this week to slash fuel bills and cut global warming pollution.

The campaign is thought to involve giving 7m houses and flats a complete refit to improve insulation, and will be compared to the 10-year programme that converted British homes to gas central heating in the 1960s and 1970s. Householders could also be encouraged to install small-scale renewable and low-carbon heating systems such as solar panels and wood-burning boilers.

In total, it is thought the Department of Energy and Climate Change will commit to cutting a third of greenhouse gas emissions from households by 2020. The announcement by the energy and climate secretary, Ed Miliband, and the communities and local government secretary, Hazel Blears, which is expected on Thursday, will be widely welcomed by environmental groups and fuel poverty campaigners who have been lobbying hard for more action to tackle emissions from homes.

The proposals are likely to require skills training and create thousands of jobs. Ed Matthew, head of UK climate for Friends of the Earth, said: "Twenty-seven percent of emissions in this country come from people's homes and if they don't cut emissions from homes radically we have got no hope of achieving our climate change targets."