The increase will add £66m to the prize fund from the September 2023 prize draw, with a potential prize pot of over £470m.

NS&I added that its Premium Bonds odds are to improve to 21,000 to 1 from 22,000 to 1, their best level since the April 2008 prize draw.

NS&I estimated that there will be 5,785,904 prizes up for grabs from September, an increase of more than 269,000 when compared to August 2023.

Interest rates for NS&I’s Income Bonds, Direct Saver, Direct ISA, Junior ISA and Investment Accounts are also to be increased from 18 August

The interest rate paid to Direct Saver customers will increase to 3.65% from 3.40%, whilst the interest rate paid to Income Bonds will increase to 3.59% gross/3.65% AER from 3.40% gross/3.45% AER.

The rate paid on NS&I’s Direct ISA will increase to 3.00% tax-free from 2.40% tax-free. Young savers will also see increases, with the rate that NS&I pays on its Junior ISA increasing to 4.00% tax-free from 3.65% tax-free.

Also from 18 August, NS&I will be increasing the interest rate that it pays on its Investment Account to 1.00% from 0.85%.

Dax Harkins, chief executive at NS&I, said the increases would help NS&I’s products remain attractive to consumers.

He said: “These upcoming increases show that we’re supporting savers up and down the country. Premium Bonds are one of the nation’s favourite savings products, so increasing the prize fund rate to its best level since 1999 and improving the odds means that more people will have the chance to win prizes each month.

“These rate increases will help ensure that our savings products remain attractive to customers, whilst ensuring that we continue to balance the needs of savers, taxpayers and the broader financial services sector.”

Laura Suter, head of personal finance at AJ Bell, said whilst the rates have increased none of them are market beating.

She said: “The rates on a whole host of other NS&I accounts are also increasing, but none of them are market beating. That means to be using NS&I you’d need to have another motivation other than getting the highest possible return. For some this will be the higher protection than the Financial Services Compensation Scheme offers or the ability to shelter their savings from tax.”