The Department for Energy and Climate Change (DECC) announced the decision overnight on July 24 saying that, because of overwhelming demand, the allocated budget had been reached.
The announcement came just hours after the Builders Merchants Federation (BMF) issued a statement hailing the Green Deal incentive as "a runaway success".
Figures released on July 22 showed that vouchers worth over £43m were issued in the first six months of the Fund’s existence and that the total number of applications meant that more than the first £50m earmarked to support the scheme had now been allocated.
Some 12,200 applications had been made, 7,925 vouchers had been issued and 1,060 authorised companies had completed the registration process and were geared up to work with end customers.
At this point DECC was modifying the offer to prolong the available money. For example, from July 25, new claimants could receive up to £4,000 for installing solid wall insulation.
However, DECC pulled the plug on the incentive before this date.
"We’re very disappointed to hear this news," said a BMF spokesperson.
"The GDHIF many not be a perfect solution to the underlying problem but it illustrates that cash incentives do entice families to act to improve the thermal performance of their home.
"There will be undoubted anger and exasperation in the supply chain that ministers have once again chosen to change direction in policy and cut funding at short notice, without warning."
He added that this "feast and famine" approach was not helpful to businesses trying to plan their investment decisions, manufacturing processes, sales operations and trading forecasts.
Iain McIlwee, chief executive of the British Woodworking Federation, agreed that it was disappointing news.
"This latest setback compounds earlier disappointments from a policy that didn’t even in its first year get near to original estimates for one day’s anticipated activity," he said.
"We need to go back to the drawing board. The more complicated you make something, the more likely it is to be abused or ignored – cutting VAT would be simpler at source and hence have more impact."