The Government-backed savings provider will increase its Premium Bonds prize fund rate from 2.2% to 3% from the January prize draw.

It is the third upwards change for the rates this year, with the prize fund rate tripling from the 1% it was in May.

The increase represents an extra £80m in prizes from the draw, with the prize fund expected to hit nearly £300m in January.

The odds will remain at 24,000 to 1.

NS&I will also increase its Direct Saver and Income Bonds interest rates, with both products increasing from 1.8% to 2.3% in January.

The Direct Saver rate will be at its highest level since launch in March 2010.

The savings provider will also increase the interest rate it pays on its Investment Account from 0.4% to 0.6%.

NS&I said the rate rises will ensure its products are price appropriately compared to the rates offered by the wider savings market.

Ian Ackerley, chief executive at NS&I, said: “The New Year increase to the Premium Bonds prize fund rate will mean that customers will have seen the prize fund rate triple in less than a year. This means a bigger prize pot and more higher value prizes for our customers – a great way to start 2023.

“The change to the Premium Bonds prize funds rate, as well as the changes to Direct Saver, Income Bonds and Investment Account, will mean that our products are priced appropriately when compared to the rest of the savings market. This will also ensure that we continue to balance the interests of savers, taxpayers and the broader financial services sector.”