* Government to take steps to cut household energy bills
* Move follows opposition Labour’s price freeze promise
* High living costs dominate debate before 2015 election
* Finance minister to give economic update on Thursday
By Peter Griffiths
LONDON, Dec 1 (Reuters) - British Prime Minister David Cameron promised on Sunday to take steps to cut rising energy costs, seeking to regain the initiative from an opposition Labour Party that has pledged to freeze bills if it wins the next election in 2015.
Cameron said his coalition government would set out measures to cut bills by an average of 50 pounds ($81.90) a year in its latest economic update to parliament on Thursday.
The soaring cost of household energy has dominated political debate in Britain since Labour leader Ed Miliband said in September that his party would freeze bills for 20 months if it wins power.
Labour has shifted its main line of attack on Cameron from the economy, which has returned to growth, to what it calls a cost of living crisis. Many families are squeezed by weak wage growth, rising bills and government cuts.
“Instead of a fake giveaway, we have found another way to support Britain’s hard-pressed families,” Cameron wrote in a joint article with Deputy Prime Minister Nick Clegg in the Sun on Sunday newspaper.
The government says Miliband’s cap on bills would not work because energy suppliers would raise their prices before and after the 20-month freeze, wiping out any savings.
Cameron said he would transfer the cost of helping the poorest families with energy prices from household bills to general taxation, paid for by a tax avoidance crackdown.
The cost of a scheme to subsidise the insulation of houses - also included in household energy bills - will be spread over a longer period to bring down its cost, he added.
Labour has used the issue of energy costs to argue that Cameron is out of touch with ordinary voters and that he has overseen an unfair recovery that has left the poorest behind.
Five of Britain’s “Big Six” energy suppliers have increased their charges this winter by an average of 8 percent, more than three times the rate of inflation.
Centrica, SSE, RWE’s npower, Iberdrola’s Scottish Power, EDF Energy and E.ON - supply 98 percent of the country’s homes.
A poll in October suggested Miliband’s promise to freeze energy bills was the most popular idea to emerge from the political parties’ autumn conferences.
A separate survey for the Observer newspaper on Sunday gave Labour a seven point lead over Cameron’s Conservatives.
Asked if the announcement was forced on the government by Miliband, finance minister George Osborne said Labour’s plans were unworkable and unrealistic.
“Ed Miliband ... promises what he can’t deliver. It’s not credible, it’s a con,” Osborne told the BBC.
Labour finance spokesman Ed Balls said shifting some of the costs from energy bills to general taxation was “taking with one hand to give with the other”.