The increase, up around £221 ($A415) from the previous cap of £1,641 ($A3,082) for April to June, will hit millions of households on variable tariffs, with analysts warning bills could climb further if disruption to shipments through the Strait of Hormuz persists.
The rise piles further pressure on Prime Minister Keir Starmer as households struggle with rising living costs.
"The rise in the price cap because of a war we did not choose is deeply unwelcome news for households across the country," Energy Minister Ed Miliband said in a statement
"We know people were under pressure before this crisis, and that's why easing that burden is our number one priority."
Wholesale British gas prices are about 45 per cent higher than before the United States began military action against Iran on February 28, blocking the transit route for a fifth of the world's liquefied natural gas.
Wholesale costs are the biggest single driver of Ofgem's quarterly price cap, which limits what suppliers can charge households and also reflects network costs and environmental levies.
Consumer groups urged the government to lay out plans to provide support for households.
The government says its push to reduce reliance on gas and increase renewable capacity such as wind and solar will cut costs in the longer term.
In April, it also shifted some levies to cut around £150 ($A282) from an average bill.
Even so, the new price cap is around 46 per cent higher than in the winter of 2021/22, before Russia's invasion of Ukraine led to a spike in global energy prices.
Britain's economy has struggled to grow in recent years and the higher energy prices could further weigh on confidence.
