Energy company E.ON is to cut its standard gas price by an average of 5.1% and has launched what it claims is the cheapest fixed tariff on the market.
It says the cut which is to be made of February 1, is the equivalent of £32 off an average annual gas bill.
The company claims the one year fixed dual fuel deal - with an average annual price of £783 - would be "Britain's cheapest energy tariff available today".
The announcement came as energy firms face pressure to pass on savings to customers, as wholesale prices for gas and electricity fall to their lowest level for five years.
E.ON is the first of the big six energy firms to cut its prices witin the last six months. However, price comparison website USwitch said E.ON's customers may feel "underwhelmed" by the size of the price drop.
Ann Robinson, USwitch's director of consumer policy, said bill reductions of at least 10% or around £120 a year on gas and electricity would more accurately reflect the fall in wholesale prices.