And in a double blow for the Environment Minister, Peter Garrett, who ordered the audit, he has suspended rebates for foil batts under the government's $2.45 billion insulation program.

The moves preceded Senate estimates hearings yesterday that revealed problems with the Green Loans scheme, including late payments to assessors and a low uptake of loans.

PricewaterhouseCooper s has been hired to audit the operations of the Environment Department and the accreditation body for assessors.

Under the scheme, households first apply for an assessment for energy- and water-saving measures, then they can later apply for a zero-interest loan to pay for measures such as the installation of solar panels.

But the scheme has been racked with problems as demand for household assessments surged, with 205,000 booked in less than a year. Original forecasts for the scheme predicted 360,000 bookings that were expected to take four years to complete.

The 5000 assessors accredited under Green Loans have also complained about inconsistent access to the government's hotline to book assessments.

At Senate estimates last night the secretary of the Department of the Environment, Water, Heritage and the Arts, Robyn Kruk, said it was operating with ''significant challenges''.

A Greens senator, Christine Milne, told the hearing she had been contacted by dozens of assessors about late payments, which meant businesses had to take out bridging loans.

Ms Kruk admitted that payments to assessors, which the government stated would be made in 30 days, has been ''too low and too slow'', blaming the surge in demand.

Departmental officials also revealed that the department had no requests for loans last week even though close to 22,000 household assessments were undertaken in the week.

The Government has set aside money for 70,000 loans over four years and expected 20,000 loans to be taken this year. So far 1000 have been approved.