This decision follows increasing pressure from Labour MPs for a change in the government's approach to benefits and pension payments.

Changes to winter fuel payments are expected to be included in the upcoming fiscal event, likely during the autumn budget.

The timing of this decision comes as the economy shows signs of improvement, providing the government with more financial flexibility to restore payments.

In a significant policy shift, Keir Starmer announced a partial U-turn on winter fuel payments, allowing more pensioners to qualify amid backlash against previous cuts.

This means-testing policy was one of the first initiatives by Chancellor Rachel Reeves after Labour's election victory, but it has faced criticism for negatively impacting the party's popularity.

Concerns over winter fuel payments were highlighted during the recent local elections, where Labour suffered losses in council seats and a parliamentary by-election.

Initially, Reeves defended the cuts as necessary to address a £22 billion deficit inherited from the previous government, despite ongoing criticisms that these measures were unsustainable.

Despite earlier denials, reports suggested that No 10 was contemplating a U-turn, leading to the eventual acknowledgment of the need for policy adjustments.

A new threshold could allow households not on pension credit to apply for benefits, potentially costing around £100 million and aiding 400,000 additional families.

There are indications that the government may also reconsider other controversial welfare policies, such as the two-child benefit cap and health and disability cuts.

Critics have pointed out that the cuts disproportionately affect vulnerable pensioners, with estimates suggesting that 100,000 could fall into poverty by 2026 due to these policies.

Focus groups indicate that voters may be more forgiving of Labour if they fully or partially reverse the winter fuel cuts, suggesting a potential path to regain public support.