The cut in the subsidy for solar power will strangle the solar energy industry at birth, Labour has claimed.
The subsidy, known as the Feed-in Tariff (FiT), is available to homeowners who have installed panels on their roofs. It means that people receive rebates for the electricity they put back into the grid.
The government has announced that it will halve the subsidy for people who have their panels installed after 12 December this year. People whose installations took place earlier will not be affected by the changes.
Shadow energy secretary Caroline Flint, posing an urgent question in the Commons on 31 October 2011, claimed the move was "another example of a government which is out of touch, cutting too far and too fast with no plans for jobs and growth".
She said the solar industry employed 3,000 people in 450 firms last year but that figure had risen to 25,000 jobs in 3,000 businesses.
"With growth flat-lining everywhere else, today's announcement actually threatens to strangle at birth the solar industry," she said.
But Energy Minister Gregory Barker, responding to the question, said the current system was no longer affordable, did not represent value for money for consumers and added to household energy bills.
Mr Barker told the Commons: "If we don't act now, the entire £867m budget for the current spending review period would be fully committed within the next few months.
"That would limit the number of people able to benefit from the feed-in tariffs."
Ms Flint acknowledged the FiT "may have needed adjustment as costs fell" but argued that the government's handling of it had "left 25,000 workers in a high-tech industry of the future facing the dole".
Green Party leader Caroline Lucas asked for a "stay of execution" for community projects which already have planning permission so that they are not bound by the December deadline.
Mr Barker said the government would "look to see if we can create a special tariff for community schemes" which had been "totally ignored" by the previous Labour government.