The new issue launched yesterday at 3%, more than double the old rate of 1.3%.

When the Green Savings Bond first launched in October 2021 the rate was 0.65%.

The rate increase brings the green bonds closer in line with the most competitive 3-year bond rates on the market, with the best rates currently close to 3.5%.

The green bonds are fixed for three years, with a minimum investment of £100 and a maximum of £100,000.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said new savers could see the rate rise as a green light to get stuck into ethical savings but warned the three-year fixed term may not be right for many savers.

She said: “Those who locked in last October for a miserable 0.65% will be feeling green around the gills – and anyone eyeing up the new rate needs to consider whether they’ll feel the same in a year’s time.

“Savers who bought into the very first issue last October had to have felt their green credentials were far more important than the interest rate. Even back then 0.65% was a miserable offering - and around a third of the best three-year rate on the market. However, they weren’t to know that inflation would rocket and that rates would rise, so they can’t have appreciated just what their decision would cost them. They’re bound to be feeling green around the gills when they see how much the new issue is offering.

“New savers could see this as a green light to get stuck into ethical savings. However, it’s worth thinking carefully before you do – so you don’t succumb to the green-eyed monster during the term. Three years may not be the most rewarding period to fix for. Right now you’re not getting paid an enormous premium for fixing for longer – because the swaps market influences the rates on offer, and the swaps market thinks that rates will rise in the short term and fall back later.”

The Green Bonds pulled in £228m for NS&I from launch in October to the end of March 2022.

Critics said the amount raised by the Green Savings Bonds was underwhelming. 

NS&I increased the rates on its Direct Saver, Income Bonds, Direct ISA and Junior ISA, products last month.

NS&I is backed by the Treasury and has 25m customers.