NS&I will increase the Premium Bond prize rate from 3pc to 3.15pc next month in a boost for more than 22 million savers.
The last time the prize fund rate was this high was in May 2008, nearly 15 years ago.
As a result, Britain’s best loved savings account will become a best buy, paying the highest rate of any “easy access” account.
The odds of winning will stay the same, at 24,000 to one, but savers will have more opportunities each month to win prizes worth £50 to £100,000.
There will be an extra three £100,000 prizes up for grabs, as well as another six £50,000 prizes and 12 more £25,000 prizes.
The number of £50 prizes will jump from 1.16 million to 1.28 million, while the number of £25 prizes will drop from 2.62 million to 2.38 million.
There will be an extra 31 prizes worth £10,000 and another 61 prizes worth £5,000.
The total size of the prize pot will grow from £299m to £314m.
NS&I works out the monthly prize pot by applying the prize fund rate to the total amount of £1 bonds held by savers.
This is the fourth consecutive increase in the Premium Bond prize rate in the last year with competition in the savings market shows no signs of letting up.
Although the prize rate is not guaranteed, it is now higher than the rate on the current top easy-access savings account, which is 3pc on deposits of £10,000.
The bank has also increased the rate on its easy access Direct Saver and Income Bonds accounts from 2.3pc to 2.6pc, which will benefit more than 870,000 savers.
The number of people signing up for these accounts has risen from around 570,000 in December. Income Bonds are now paying their highest returns since 2008.
The interest rate on NS&I’s Direct Isa account has risen from 1.75pc to 2.15pc to its highest level since 2013.
Around 80,000 children will benefit from an increase to the Junior Isa rate, which is up from 2.7pc to 3.4pc.
NS&I’s move to raise rates could pile pressure on banks to raise their easy access and variable Isa rates to stay competitive.
Ian Ackerley, chief executive of NS&I, said: “In a fast changing savings market, we’re committed to making sure our products remain competitive and our customers get a good return on their savings. Today’s changes ensure that we continue to balance the needs of savers, taxpayers and the broader financial services sector.”