Almost half of all houses in the UK require more insulation according to new figures released by the Department of Energy and Climate Change.
Only 57% of houses have any loft insulation and only 58% of cavity walls are properly fitted.
The study estimates that the average UK household could save around £100 a year on energy bills, if the houses were properly insulated.
DECC research also shows 479,000 professional insulation measures have been installed, against a new target of more than 3 million installations planned before the end of 2012.
Energy and climate change secretary, Chris Huhne, said: “At a time when money is tight and with energy prices predicted to rise, householders are missing out on over £100 of savings every single year by not getting their lofts lagged and cavity walls filled.”
Recent research from energy company E.ON also discovered that 31% of homeowners struggle to estimate how much money an insulation strategy could save them.
The government’s Green Deal will also cover home improvement measures such as replacing leaky windows and upgrading central heating systems.
There will be no upfront cost and payments will be recouped through fuel bills.