The �20 annual winter allowance for the country's eight million elderly households, has been boosted to �100 per household.

Gordon Brown said the new figure would stand for "future years".

"This is not a one-time need or a one-time decision," he said.

He also announced measures to help the elderly get more out of their savings with a new pensioners savings bond - designed to offer greater return on short term deposits.

"With the shorter term deposits that pensioners want, this new bond will offer the returns that pensioners need."

Minimum income guarantee

The chancellor has also introduced a minimum pension guarantee to be increased in line with earnings.

From next April the minimum income for single pensioners will be �78 a week and elderly married couples will be guaranteed more than �120 per week.

Mr Brown said the figures marked an annual increase of �500 for single pensioners and �800 for elderly married couples since Labour came to power.

Pensioners will also be entitled to continue claiming the married couples allowance.

Tax break

The elderly are also in for a tax cut. Reforms will see a total of seven million pensioners outside the income tax system.

On top of that personal tax allowances have been raised for the elderly in excess of inflation;

• Single pensioners will not pay tax until they have an income of �5,720
• Older pensioner couples who both use their personal allowances to the full will not pay tax until they have incomes above �15,000.

The moves exempt 200,000 more pensioners from income tax and increases by two-thirds the total number of pensioners who do not have to pay tax.

"Taken together the measures I have already announced add up to an additional �3bn, a better deal for the elderly that makes the typical pensioner household �240 a year better off," Mr Brown said.

'Substantial boost'

The charity Help the Aged said the chancellor's package amounted to a substantial boost for the elderly but it had been surprised by the shape of the assistance.

"Help the Aged is still perplexed that the chancellor chose these various measures rather than make a straightforward increase to the Basic State Pension. Raising that to �75 would have cost about the same as his �3 billion promised today," a spokesperson said.

However it concluded that the Budget signified a positive change of direction for the elderly.

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