The company says the cuts will save 2 million customers 7%, or £50 on their annual gas bills and a further 4.8% or £40 on electricity bills.
The cuts will take effect from 26 March and dual fuel customers will receive a £10 annual discount.
Npower says it has continued to cut prices for customers despite its profits halving in 2009. British Gas was lambasted last month after announcing profits soared 58%.
It is the fourth of the major utilities provider to announce energy price cuts.
Yesterday, rival energy firm E.on pledged to cut prices by 6% from 31 March.
Scottish & Southern has already said it will cut prices by 4% and British Gas announced 7% cuts in February and claims it is the cheapest dual fuel provider.