Chancellor George Osborne announced sweeping changes to Isas including an increase in the annual Isa allowance from £11,880 to £15,000 from 1 July and a merged cash and stocks and shares Isa to be called the New Isa, dubbed the 'Super Isa' by some.
Mr Osborne said: "Twenty four million people in this country have an Isa and yet millions of them would like to save more than the annual limits of around five and a half thousand pounds on cash Isa, and eleven and a half thousand pounds on stocks and shares Isas.
"Three quarters of those who hit the cash Isa limit are basic rate taxpayers.
So we will make Isas simpler by merging the cash and stocks Isa to create a single New Isa.
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"We will make them more flexible by allowing savers to transfer all of the Isas they already have from stocks and shares into cash, or the other way around.
And we are going to make the New Isa more generous by increasing the annual limit to £15,000."
Mr Osborne said he would also raise the limit on Junior Isas to £4,000 a year.
Investment industry leaders welcomed the Isa boost.
Daniel Godfrey, chief executive of the Investment Management Association, said that the changes would encourage the flow of capital into industry.
He said: "I want to congratulate the Chancellor on the increase in the limit and simplification of the Isa scheme.
"The New Isa will encourage savings that will build the resilience of citizens and encourage a flow of capital to industry that will drive GDP growth, create new jobs and produce the tax revenues that underpin infrastructure, education and the welfare state."
Carol Knight, operations director at Tisa – the Tax Incentivised Savings Association, said New Isas were " excellent news for savers."
She said: "Isas are extremely popular and trusted by the consumer and we are delighted that greater flexibility and simplicity is to be introduced. The ability to transfer from a stocks and shares Isa to a cash Isa is particularly welcome and is something that we have long argued for. "
Elissa Bayer, senior investment director, at Investec Wealth & Investment, said: "It's encouraging to see that savers can benefit from a new breed of tax-free Isas with an allowance of £15,000 and the end to the absurd rule that only allows savers to transfer cash Isas into stocks and shares and not the other way round."
Tony Stenning, head of UK Retail at BlackRock, said: "It is pleasing to see the government continuing to support tax efficient savings vehicles by simplifying Isas and increasing the overall Isa limit to £15,000 in today's Budget.
"Our own Investor Pulse research shows that 40% of Britons save or invest in Isas, with the products used by many as portable savings pots to supplement their pensions.
A spokesman for the Wealth Management Association said: "This Budget answers investors' calls for the freedom and flexibility to manage their financial affairs for the future. We now have a simple, nicer NISA to replace the current system.
"We continue to emphasise to the Treasury that what is good for investors is good for companies, and vice versa. Today's Isa reforms mean companies can attract more investment from the UK's four million individual investors, who in turn can benefit from their growth. Everybody wins."
Andy James, head of retirement planning at Towry, said "With the impending lifetime allowance reduction, many people will need to seek alternative ways of saving for their retirement as the reduced allowance may not, in itself, be enough. Isas are an obvious first port of call if your pension is hitting the lifetime allowance limit, and the Government has dramatically aided this valuable tax benefit today by announcing the merger of cash and stocks and shares Isa to create a £15,000 'Super Isa'."
Christian Faes, co-founder and director, LendInvest, said: "The Chancellor's decision to extend Isas to include peer-to-peer lending is the shot in the arm the sector needed."