Kevin Rudd has unveiled a $300m plan to offer interest-free loans to households converting to green power.

Families will be eligible for loans of up to $10,000 to install solar power systems, solar hot water heaters, rainwater tanks and energy efficient lighting. These loans would effectively off-set the cost of purchasing clean energy systems. Households can then repay the loan according to their own financial timetable.

The loans will be available to homes with an income of up to $250,000. The Labor leader defended his decision to give high-income families access to low-interest government loans.

"We don't have some sort of class enemy basis upon which we do this - that’s the old politics of the past," Rudd said.

Kevin Rudd announced the green loans scheme at Labor's national conference at the weekend, calling the plan “practical” and the kind of “bread and butter stuff the Labor Party is good at.”

"These are the practical things that make a difference in bringing down our greenhouse gas emissions."

Renewable energy retailers have welcomed Labor's initiative.

Max Sylvester, marketing director of Australian solar company Energy Matters , said, “We receive hundreds of calls from people each month wanting to install solar PV (photovoltaic) systems, but many people balk at the set up cost. In the past, households in the city have only installed solar systems for environmental reasons, but with incentives like the green loan plan and government subsidies, renewable energy is becoming sound economically as well as environmentally.”

“Solar energy systems are getting cheaper all the time, and we welcome aggressive government policies that will encourage competition, improve technology and drive prices down. As electricity becomes inevitably more expensive, the time it takes to recoup the initial cost of installing solar power in the home will dramatically decrease, so the consumer benefits,” Sylvester said.

Labor has drawn criticism from the government for committing Australia to a 60% reduction in greenhouse gas emissions by 2050. This new clean energy scheme is yet another blow to the prime minister's pre-budget environmental policy launch next week.

Howard has reiterated his commitment to introducing nuclear reactors to meet the nation's energy needs into the future. He said nuclear was the only other option apart from coal to deliver reliable power supplies.