LONDON (Reuters) - Household fuel bills could be cut by up to £500 per year if consumers were given financial incentives to become more environmentally friendly, according to a report.

The average household could cut energy bills by at least two-thirds — equivalent to a £475 annual saving at today's prices — research by Oxford University's Environmental Change Institute says.

By 2050, UK-wide savings could hit £12.3 billion per year.

The "Home Truths" report, commissioned by Friends of the Earth and the Co-operative Bank, said a range of incentives to becoming greener would lead to the savings.

They would also cut carbon emissions from UK homes by 80 percent by 2050. The range would include grants, low interest loans, green mortgages, stamp duty rebates and a reduction in VAT on energy efficiency measures.

The report also called for homeowners with low or zero carbon technology who sell electricity back to the grid to receive a guaranteed premium price.

Report author Brenda Boardman said it was a "win-win scenario".