Alistair Darling has suggested a radical reform of the energy market, calling for electricity company profits to be linked to efficiency.

In a speech to the Fabian Society on the government's energy review - expected to report this summer - the industry secretary also said nuclear power "cannot be ignored".

He said meeting the UK's emissions targets would require a substantial reduction in the demand for energy as well as making changes to how power is supplied.

"If we can reduce energy demand - in absolute terms - we could reduce the need for some of the new power stations that we will otherwise need, with carbon emissions and energy security benefits," he said.

Darling discussed some of the government's plans to raise public awareness of how to save energy, and said the country had to "break the link between GDP growth and the demand for energy".

He said: "But we need to ask not only what consumers can do but what the producers can do possibly more effectively.

"Today companies have the incentive to sell as much as as they can and our inefficiency creates more demand for energy.

"If we're going to reduce demand we need to turn current thinking on its head and put the incentives on the power companies to reduce demand.

"Not just to supply your electricity, but perhaps to supply insulation, double glazing, or other things that save us from wasting energy.

"Energy supply companies that deliver outcomes such as heat and light and earn profits either through efficient supply of energy or reducing demand."

The prime minister was recently criticised of pre-empting the review with comments interpreted as backing nuclear power.

Tony Blair said the stark facts of the UK's future dependence on imported energy "put the replacement of nuclear power stations, a big push on renewables and a step change on energy efficiency, engaging both business and consumers, back on the agenda with a vengeance".