FoE campaigners issued the call for an amendment to the bill following publication of a report, commissioned by the Department for Business Enterprise and Regulatory Reform (BERR), stating that increased use of micro-generation could reduce UK carbon emissions by 5%.
The report also suggests that with more government support in the form of "feed-in" tariffs or grants towards the cost of equipment, the uptake of such technologies could be significantly increased.
FoE green homes campaigner, Dave Timms, commented: "This report highlights the Government's failure to develop the huge potential for tackling climate change and cutting fuel bills through micro-generation - and calls for financial incentives to make this happen. Ministers must stop dithering and take urgent steps to reduce our dependence on fossil fuels."
He continued: "Huge quantities of UK electricity could be generated through renewable energy systems such as solar panels and wind turbines. The Energy Bill must be amended to guarantee a premium payment to homes, businesses and communities for generating green energy."
Feed-in tariffs are considered a popular option as they have been widely used across Europe in countries such as Sweden and Germany.
Gordon Brown recently courted controversy by crushing the biggest labour MP rebellion of his premiership to halt plans to amend the energy bill.
The amendment would have guaranteed the introduction of a UK feed-in tariff within a year.