George Osborne has played down the prospect of dramatic tax cuts or extra spending commitments in his Autumn Statement this week as he promised to deliver a "responsible recovery".
The Chancellor insisted the coalition would keep the public finances under tight control, saying moves to cut energy bills and give home buyers £1,000 grants for insulation would be fully funded through a crackdown on tax dodgers.
The comments, in an interview with the BBC's Andrew Marr Show, came as ministers made a concerted bid to blunt the Labour attack on cost of living. The coalition has been on the back foot over energy bills ever since Ed Miliband pledged to freeze prices for 20 months if he wins in 2015, with public fury greeting news that suppliers were hiking prices by up to 10%.
Signs of a sharp upturn in growth have led to speculation that Mr Osborne could have room to ease the pressure on families after years of austerity.
But although he is expected to curb business rates, the Tory MP stressed he was still having to take "difficult decisions".
" In the Autumn Statement I will say the job is not yet done because we have got to make sure we go on taking the difficult decisions to secure the recovery," he said.
"We also want a responsible recovery. We want to learn from the mistakes of the past and not see a re-emergence of those problems in the financial system that brought this country to its knees."
Mr Osborne endorsed the Bank of England's action last week to cool the housing market by limiting its Funding for Lending scheme to supporting businesses rather than mortgages.
"On housing, in particular, what the Bank of England says - what I say - is that there is not a housing bubble at the moment but we want to make sure one doesn't develop," Mr Osborne said.
"I think you see us working in concert - the Bank of England and the Treasury - to make sure that we do not repeat the mistakes of the past."
The changes to environmental levies will see the the cost of the Energy Company Obligation (ECO) scheme halved by giving the "Big Six" power firms two years longer to hit targets.
Other policy charges will be funded from general taxation in future. EDF has welcomed the move and indicated that it is not likely to increase prices again before 2015, with other firms expected to follow suit.
To ensure carbon emissions do not rise as a result of the deal, anyone buying a home will be eligible for the £1,000 grant for energy efficiency measures, such as installing insulation or replacing the boiler. The sum could be even higher if the property needs a lot of work.
Mr Osborne dismissed the idea that energy companies will pocket the reduction in government levies without bringing down bills.
"We are absolutely insistent that this is passed on... I am pretty clear with you that it is going to happen," he said.
He refused to give details of the new drive against tax avoidance but said people were wrong to be sceptical about whether such action really raised revenue.
"The money will come from additional taxes that we will raise from dealing with tax avoidance," he said. "This government has taken step after step and the amount of tax we collect from people who were previously avoiding their tax goes up by billions of pounds over this parliament.
The chancellor attacked Labour's policy of an enforced freeze, saying that ministers could not control international energy markets.
"We are doing it in the way that government can do it, which is controlling the costs that families incur because of government policies," he said.
"We are also doing it in the way that is not going to damage the environment or in any way reduce our commitment to dealing with climate change."
He went on: "It is all about providing people with carrots not sticks and I think that is the right way for this country to go green."
Liberal Democrat party president Tim Farron said it had been a "struggle" to persuade the Tories that funding for environmental measures should be maintained at the same level.
"I was as despondent as many reasonable people when David Cameron's panicked reaction to the issue in the last month or so was to decide to ditch all the green stuff, and it's been a job and a half over the last month to make sure we hold him very much to those sort of pledges and the green core of this Government," he told the BBC's Sunday Politics.
"That is why we're not scrapping the investment, we're just making sure it's funded from general taxation."
He added: "The notion we should stop insulating the homes of elderly people or indeed stop investing in British manufacturing to the green industry is something that I absolutely, resolutely oppose.
"But I'm very pleased the funding is still going to be made available for all that and instead come from general taxation."
Chief Secretary to the Treasury Danny Alexander, another Lib Dem, stressed that the new measures would be paid for by "tax dodgers" and would "not sacrifice a single gram of carbon".
But shadow chancellor Ed Balls insisted the Government should "get a grip" and impose a freeze at the expense of the energy companies, rather than transferring costs to general taxation. He said he doubted the current position would last 24 hours.
"Why do David Cameron and George Osborne run scared in the face of energy companies who have been putting up bills month by month, year by year?" he said.
"If energy companies came together as a cartel to push up prices to try and pre-empt a government action that would be a total abuse of market power and any sensible regulator would step in and stop it happening. I don't think they (energy companies) are going to do that although they are putting their bills up now."
EDF said its "decision to hold back the full impact of rising costs" earlier this month by implementing a lower rise than competitors had been "validated by (the) confirmation that the Government will take action on energy charges".
"EDF Energy was the only major energy company to lessen the impact of higher charges in advance because it was confident that action could be taken to reduce costs," it said in a statement.
"Following this news, EDF Energy expects to be able to maintain its lower price rise of 3.9%, as anticipated. That decision left customers with bills £80-96 lower than major competitors who had announced price increases."
"The company looks forward to hearing more detail from the Government, but does not anticipate that EDF Energy's prices will rise again in 2014.
Ramsay Dunning, Co-operative Energy's group general manager, said: "We welcome the Government's decision to take some of the costs off customers' bills, and to change the ECO scheme to help more people than previously.
"In anticipation of the move, and as part of our commitment to put customers first, Co-operative Energy removed ECO costs from bills in early November, which means our customers have already benefited from the decision."
Richard Lloyd, executive director of consumer group Which?, said: "It is possible to be both leaner and greener, with our analysis showing that the Government could save hard-pressed consumers as much as £68 off their annual energy bills, while helping the same number of people insulate their homes this year and keeping to our green commitments.
"Successive governments have failed with their energy efficiency policies, which we estimate will cost consumers £8.4 billion by 2015.
"A radical overhaul is long overdue so we look forward to seeing the full details from the Chancellor in his Autumn Statement this week."