The government has announced that it will provide no further funding to the Green Deal Finance Company and will also stop any future funding of the Green Deal Home Improvement Fund.
The Department of Energy & Climate Change (DECC) said the decision was made following low take-up and concerns about industry standards.
Energy secretary Amber Rudd said the government will work with the building industry and consumer groups on a new value-for-money approach.
DECC said the decision has no impact on existing Green Deal Finance Plans or existing Green Deal Home Improvement Fund applications and vouchers.
Ms Rudd said: “We are on the side of hardworking families and businesses – which is why we cannot continue to fund the Green Deal.
“It’s now time for the building industry and consumer groups to work with us to make new policy and build a system that works.
“Together we can achieve this government’s ambition to make homes warmer and drive down bills for 1 million more homes by 2020 – and to do so at the best value for money for taxpayers.”
The government has commissioned an independent review led by Peter Bonfield to look at standards, consumer protection and enforcement of energy efficiency schemes and ensure that the system properly supports and protects consumers.
FMB chief executive Brian Berry said the government’s announcement was the “final nail in the Green Deal’s coffin”.
“The Green Deal was the greatest flop of the last Parliament – it failed spectacularly in its mission to incentivise millions of house holders to improve the energy efficiency of their homes,” Mr Berry said.
However, Mr Berry said the government would have been wise to reform, rebrand and relaunch the Green Deal rather than scrap it altogether.