British Gas plans to abolish standing charges levied on its customers and replace them with a "pay for what you use" system.

The group said the move would bring to an end flat-rates charges on both its gas and electricity customers, and that it plans to introduce the change in April.

Its 14.5 million gas customers currently pay an average standing charge of £51.32 a year, with direct debit payers paying £26.83.

The group's 2.5 million electricity customers pay an average standing charge of £59 or about £34 if they pay by direct debit. The standing charge must be paid regardless of how much gas or electricity is used.

'Good news for consumers'

But under a new tariff system, customers will now receive a bill in direct proportion to the amount of gas or electricity they use.

It could mean lower bills for customers who use small amounts of gas or electricity, and for whom the standing charge currently represents a large proportion of their bill.

Trade and Industry Secretary Stephen Byers said: "I am pleased the government's concerns about the unfairness of standing charges are at last being addressed.

"This will be good news for many consumers, especially pensioners who use relatively small amounts of gas and electricity."

Help the Aged also welcomed the change and said British Gas had "thrown down the gauntlet" to other service providers who still levied standing charges.

Standing charges are levied by other electricity companies and water companies and also include telephone line rental charges.