The new rate is significantly below the current top providers for a three-year bond.

The rate is also below some of the other environmentally-focused accounts on the market, many of which do not require a three-year tie-up to beat the rate, said A J Bell.

For someone with £10,000 saved the new lower rate means £577 less interest over the three years, said Laura Suter, head of personal finance at AJ Bell.

She said: “NS&I has once again wielded the axe to its savings rates, this time slashing the rate on its eco-savings product. This is a trend we’re likely to see on repeat, as many expect that we’ve hit peak interest rates and that savings rates will only drop from here.”

Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “The rate on NS&I three-year green bonds has been subjected to a savage pruning, from flourishing almost at the top of the market, to wilting away well below the most competitive rates.

“Savers can make far more elsewhere, so they’d need an over-riding passion for funding government green projects to prioritise this account.”

She pointed out the move has not been driven purely by NS&I’s fundraising targets, because the green bond sits outside that.

Launched in 2021, the Green Savings Bond allows savers to help fund green government projects across the UK. The bonds are used alongside gilts to raise funds for green projects as part of the UK Government Green Financing Framework. Green Savings Bonds are separate to NS&I’s Net Financing target set by HM Treasury each year.

The first issue of green savings bonds went on sale on 22 October 2021. Issue 5 of the bonds went on sale on 22 August and was available until 13 November. Issue 6 became available on 14 November.

As of 31 March 2023, more than £915m had been invested in Green Savings Bonds, compared to £288m at the same point the year before, according to NS&I.

The minimum investment in the bonds is £100 with a maximum limit of £100,000 per person for each issue.