* Government to review competition in energy sector
* Cameron says he will cut back green regulations
* Rising energy prices dominate political debate
* Labour says Cameron is panicking over high prices
By Peter Griffiths and William James
LONDON, Oct 23 (Reuters) - British Prime Minister David Cameron sought to regain the initiative in a political row over soaring energy prices on Wednesday, promising to try to improve competition in the sector and to cut green taxes that have helped inflate prices.
Energy costs have become a high-profile political issue in Britain after the opposition Labour Party promised to freeze bills for 20 months if it won the next election in 2015 and several energy firms unveiled sharp price increases.
How much Britons pay to heat their homes has also played into a wider debate about the cost of living which has risen as inflation and price rises from everything from utility bills to train tickets have outstripped stagnant wages.
"We need to roll back some of the green regulations and charges," Cameron told parliament during an emotionally-charged debate. "We will be having a proper competition test carried out over the next year to get to the bottom of whether this market can be more competitive."
Even though the overall economy is improving, Labour, who are just ahead in most opinion polls, have said many people will be faced with a choice between "eating and heating", accusing Cameron's ruling Conservatives of being out of touch.
Cameron on Wednesday described the high cost of energy bills as "unacceptable", but said Labour's plans to freeze prizes were an unworkable "con". He too was prepared to intervene in the sector, he added, but in a way that was practical.
Energy supplier RWE npower raised electricity and gas charges by an average of 10.4 percent on Monday. That followed Centrica's average 9.2 percent rise and an 8.2 percent increase by SSE. Centrica's shares fell 1.2 percent after Cameron spoke.
The other three members of the "Big Six" who control 99 percent of the British retail energy market are Scottish Power, a unit of Spain's Iberdrola, EDF Energy and E.ON.
The price rises stirred a debate about the profits made by the six firms and whether consumers are getting a fair deal.
Labour leader Ed Miliband seized the initiative on energy prices last month with an attack on a market he described as broken with a pledge to freeze bills.
Cameron dismissed the idea as unworkable but conceded that Miliband had "struck a chord" at a time of squeezed wages and rising household bills.
He came under further pressure on the issue on Tuesday when former Conservative prime minister John Major suggested Britain should tax energy firms' "excess profits".
Labour energy spokeswoman Caroline Flint said Cameron was "panicking over his failure to address soaring energy bills".
Any cuts to environmental regulations are likely to anger Cameron's coalition partners, the Liberal Democrats, a party keen to promote its record on green and social issues.
"(We) will not allow the Conservatives to undermine our commitment to the environment, hurt the fuel poor, or destroy our renewable energy industry," said a Liberal Democrat source.
Environmental taxes and social charges contribute nearly 10 percent to domestic energy bills, which average more than 1,200 pounds ($1,900) a year for each household.
The competition review will start in the coming weeks and will look at "prices, profits and barriers to new entrants" to the sector and will rule nothing out when it comes to making it more competitive, Cameron's spokesman said.
More details of any environmental tax reforms will be given in the government's fiscal policy update to parliament on Dec. 4, the spokesman added.
The energy companies blame the rises on wholesale prices, the cost of the supply network, and the government's environmental and social programmes.
"We have long recognised there is significant political and regulatory interest in energy supply markets and a balanced audit of competition in the market should be a useful additional step towards building customers' trust"," an SSE spokesman said.