The amount that investors can hold in premium bonds has increased to £40,000 from 1 June.
Investors will have the chance to win a second monthly £1m jackpot in the August draw. NS&I, the provider of premium bonds, said it expects the additional prize to be funded by new money coming in as a result of the increase in the subscription limit.
The last time the maximum investment limit for premium bonds went up was in May 2003 - an increase from £20,000 to £30,000. As many as 600,000 customers already hold £30,000 in premium bonds, which provide investors with 100 per cent capital security because NS&I is backed by HM Treasury, while offering the chance to win tax-free prizes.