Nine million pensioners with an income of £35,000 or below will get the winter fuel payment, Chancellor Rachel Reeves announced on Monday after a major U-turn.
The move means 7.5 million more pensioners than previously will get the allowance after the Government changed the policy in the face of a backlash by voters, including in the May elections which saw Reform surge, Labour MPs and party activists.
The Treasury stressed that now no lower or middle-income pensioners will miss out on the allowances of up to £300.
More than three quarters of pensioners in England and Wales would get the payment, in time for this winter, it added.
Around two million pensioners in England and Wales with incomes over £35,000 will continue to miss out on the payment.
For pensioner couples, the new rules are slightly more complicated.
If they each have an income on or below £35,000, they will keep the full winter fuel payment.
If they are both above this level, they will lose it.
If one of them has an income of £35,000 or below, and the other has a higher income, they would get half the winter fuel payment.
Shortly, after coming to power last summer, the Chancellor announced that the winter fuel payment would be scrapped for around ten million pensioners, with only those on Pension Credit, or similar benefits - some 1.5 million people, still getting it.
Announcing more details of the U-turn on Monday, Ms Reeves said: “Targeting Winter Fuel Payments was a tough decision, but the right decision because of the inheritance we had been left by the previous government.
“But we have now acted to expand the eligibility of the Winter Fuel Payment so no pensioner on a lower income will miss out.”
Age UK, the leading charity for older people in the UK, welcomed the Chancellor's announcement.
Its charity director Caroline Abrahams said: "The decision to restore the winter fuel payment to nine million pensioners - all but those on the highest incomes who should be able to pay their heating bills without it - is the right thing to do and something that will bring some much-needed reassurance for older people and their families.”
Pensioners above the £35,000 threshold will have the full amount of the winter fuel payment they received automatically collected via PAYE, or via their Self-Assessment return, or they can opt out.
The U-turn will cost around £1.25 billion in England and Wales, while the means-testing of it aims to save around £450 million.
The payment of £200 per household, or £300 per household where there is someone over 80, will be made automatically this winter.
Ms Reeves announced the changes ahead of the Spending Review on Wednesday.
She has been locked in talks with Home Secretary Yvette Cooper and Housing Secretary Angela Rayner over their budgets.
The Government also faces a threatened Labour revolt over welfare cuts.
