The Household Support Fund will be distributed by councils in England which will issue small grants to meet daily needs such as food, clothing, and utilities.

The cash will be made available to local authorities in October 2021, with the devolved administrations will receiving up to £79m of the £500m.

Thérèse Coffey, secretary of state for work and pensions, said: “Over the last year, we have helped millions of people provide for their families. Many are now back on their feet but we know that some may still need further support. Our targeted Household Support Fund is here to help those vulnerable households with essential costs as we push through the last stages of our recovery from the pandemic.”

Rishi Sunak, chancellor of the exchequer, said: “Everyone should be able to afford the essentials, and we are committed to ensuring that is the case. Our new Household Support Fund will provide a lifeline for those at risk of struggling to keep up with their bills over the winter, adding to the support the government is already providing to help people with the cost of living.”

This new fund will run over winter and those in need of support should contact their local council who will help them access the fund.

Sarah Pennells, consumer finance specialist at Royal London, said: “As we continue to feel the effects of the pandemic, it’s vital that there’s help for those who are financially vulnerable. From October, many families are likely to find it much harder to make ends meet every month, especially given the cut to Universal Credit and rising bills. With energy costs set to soar and winter weather on the way, this extra funding from the Government is desperately needed to help the most vulnerable households heat their homes and feed their families.

“Anyone worried about paying their bills should contact their energy provider in the first instance, while organisations such as our charity partner Turn2us, can help people work out if there are other benefits or grants they may be eligible for.”

Other support available to vulnerable households include the Warm Home Discount which provides a £140 rebate on energy bills each winter to more than 2.2 million low-income households and the Cold Weather Payment which provides £25 extra a week for poorer households when the temperature is consistently below zero.

Earlier this year the government expanded the £221m Holiday Activities and Food programme, which has offered meals and activities to disadvantaged children across the Easter and Summer holidays, and will do so again this Christmas.

The launch of the Household Support Fund comes as the furlough scheme closes, having provided support to workers since March 2020.