Around four million households on pre-payment meters will see their power bills slashed and providers will have to share customer data to allow rivals to offer them better deals under proposals announced by the energy watchdog.
The announcement was made just days after Liverpool City Region Child Poverty and Life Chances Commission - chaired by Birkenhead MP Frank Field - put energy companies in the dock for making Merseyside the nation’s "rip-off capital" when it comes to charging for gas and electricity.
The group has been campaigning to see an energy price cap imposed for low income families.
The Competition and Markets Authority today said British households could have been overpaying by around £1.7 billion a year.
It added that the Big Six providers have been taking existing customers - 70% of whom are stuck on standard variable rate deals - for granted.
In its long-awaited report, the CMA said it wants to set a temporary price cap for low income and vulnerable customers who have pre-payment meters.
And it plans to launch an Ofgem-controlled database allowing rival suppliers to offer those on standard variable rates for three years or more better deals.
Mr Field said: "Justice called for immediate action to level the playing field in the energy market and, in doing so, end the grotesque stacking of the odds against the poor. Today we have been given that action.
"A common concern among many food banks has been that, once families using a prepayment meter have dug deep to pay for gas and electricity, they are left without money to buy food.
"Even among some of those families who then receive much needed help from a food bank, it is reported that they cannot afford to top-up their meter with enough credit to cook the contents of their emergency food parcel.
"Over Christmas, some families in Birkenhead even pleaded for candles so they would not be sat in the cold and dark at home. They could afford to feed neither their meter nor themselves.
"So today’s action from the CMA is doubly welcome. It could be the next major breakthrough against rip-off Britain."
The child poverty group said the most recent official data showed that prepayment meters are more heavily relied upon in Merseyside than in anywhere else in Great Britain, with 23% of electricity customers and 21% of gas customers reliant on this payment method.
The data also suggest mainly more fortunate households who pay using direct debit are treated far more favourably than mainly poorer households who use a prepayment meter.
In Merseyside last year:
The average annual domestic gas bill for prepayment customers was £759; £75 higher than the bills paid by Direct Debit customers.
The average annual domestic electricity bill for prepayment customers was £656; £55 higher than the bills paid by Direct Debit customers