Installation of all 45 million smart meters is expected to cost in the region of £7 billion and the government hopes it will encourage people to reduce the amount of electricity and gas they consume.
Energy Minister Mike O'Brien said: "Smart meters will help consumers save energy and money and cut emissions.
"We've said we want smart meters in every home in the UK by the end of 2020."
The government is believed to be putting pressure on energy firms to ensure that every meter is capable of handling micro-generation data so that consumers can be paid for any electricity they supply to the National Grid.
Earlier this month the Confederation of British Industry released a report in support of smart meters.
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