Smart meters are giving readings up to six times higher than the energy consumed by households when connected to energy-saving light bulbs, according to scientists.
A study conducted by the University of Twente Enschede in the Netherlands, has found that five different types of smart meters produced readings up to 583pc higher than the actual energy used.
It is the first ever proof that smart meters, which the Government wants in every household by 2020 to improve the accuracy of people's energy bills, are producing readings which are too high.
Scientists declined to name and shame affected smart meters but confirmed that those which give wrong readings in its tests have been sold and installed in the UK.
It means as many as five million UK households in which smart meters are installed, may have potentially received inaccurate readings.
The inaccuracies are being blamed on the meter's design, along with the increasing use of modern energy efficient devices.
So called "green" devices such as energy saving light bulbs, heaters, LED bulbs and dimmers change the shape of electric currents which can result in a distorted reading, it said.
The greatest inaccuracies were seen when dimmers combined with energy saving light bulbs and LED bulbs were connected to the system.
Researchers tested the meters by connecting them to different devices which are found in a typical home.
After a week they compared the amount of energy they put into the system and compared it with the amount of current the meter registered. Afterwards they calculated the differences between the two numbers.
Five out of nine smart meter models tested gave readings which were too high, the study found.
Smart meters are a new kind of gas and electricity meter which digitally sends readings to your energy supplier to ensure more accurate energy bills.
They also come with monitors so customers can better understand their energy usage. Under Government plans which are set to cost £11 billion, every home in Britain will have a smart meter installed by 2020.
Critics have warned that it is unclear whether smart meters will save consumers any money, and could even end up costing them, as they are paying for the roll-out through higher energy bills.
According to a report by First Utility, one of the UK's biggest energy suppliers, UK households face a 42 per cent rise in the amount they pay to support government green energy initiatives, including smart meters.
It comes as a number of SSE customers were wrongly told that they had used thousands of pounds worth of energy. One customer's display showed more than £30,000 for a single day.
The author of the report, Prof Leferink, said: "We've known since 2009 electronic meters can give readings which are too low. But this is the first time we've seen they can be much too high. We were flabbergasted by our results.
"The study was carried out in a laboratory setting. If you looked at ones in homes I don't expect they would be 500 or 600 per cent out. But what we have shown is the reading can clearly deviate a lot from the power customers are actually consuming."
Doug Stewart, chief executive at Green Energy UK, said: "Around 15pc of households in the UK already have smart meters which could be affected by this issue. It is alarming, but it does not necessarily mean people have lost money. Smart meters are essentially a 'second check' as energy suppliers keep a record of energy consumption and if there is a discrepancy, they will know."
A BEIS spokesman insisted that smart meters installed in the UK have to comply with regulations which mandate high standards of accuracy.
He said: “Smart meters are a vital upgrade to Britain’s energy system. The technology will bring an end to estimated billing, and give consumers real-time information about their energy use to enable them to make more efficient energy choices. By 2020 every home and small business will have been offered a smart meter."