Chancellor George Osborne has announced that the UK will guarantee a £2bn deal under which China will invest in the Hinkley Point nuclear power station.
Mr Osborne, who is in China, said the deal would pave the way for a final investment decision on the delayed project by French energy company EDF.
He said it would also enable greater collaboration between Britain and China on the construction of nuclear plants.
EDF welcomed the news but did not say if it put the project back on track.
Earlier this month EDF admitted the Hinkley project in Somerset, which was intended to allow the plant to generate power by 2023, would be delayed.
It came after the French firm announced in February that it had pushed back its decision on whether to invest in the plant.
The £24.5bn power station would be Britain’s first new nuclear power plant for 20 years and is expected to provide power for about 60 years.
Mr Osborne said: “Britain was the home to the very first civil nuclear power stations in the world and I am determined that we now lead the way again.
“Nuclear power is cost-competitive with other low carbon technology and is a crucial part of our energy mix, along with new sources of power such as shale gas.”
Mr Osborne said Chinese companies would receive a substantial stake in the project, with the UK government acting as guarantor for the investment.
The guarantee will be provided by the government’s Infrastructure UK Scheme, which provides finance for projects that have had difficulties raising money from private investors.
EDF has struggled to find co-investors for Hinkley, which the government has said will provide up to 7% of Britain’s entire energy needs from 2023.
EDF, which will continue to control the venture, has agreed to provide electricity from Hinkley at a guaranteed minimum price of £89.50 per MW hour for 35 years.
Vincent de Rivaz, chief executive of EDF Energy, said the chancellor’s announcement was “further progress towards a final investment decision” on the plant.
He said: “The chancellor’s approval of the infrastructure guarantee is a clear sign of the government’s commitment to Hinkley Point C. The government’s determination to bring about a renewal of infrastructure and to attract inward investment to the UK are demonstrated by this good news.
But Greenpeace’s chief scientist Dr Doug Parr described the £2bn guarantee from George Osborne as “signing up the country for the ultimate rip-off deal”.
He added: “Instead of locking two generations of UK consumers into paying billions to foreign state-owned firms, Osborne should invest in the flexible, smart, and truly clean energy system that can power a 21st Century Britain without leaving a pile of radioactive waste as legacy.”
Energy Secretary Amber Rudd said the government would continue to work with EDF to finalise the Hinkley deal.
Ms Rudd also told the Financial Times she wanted Beijing to take the lead in developing new nuclear plants in Britain.
She said China was expected to lead the construction of a Beijing-designed nuclear station at Bradwell in Essex.
The union Unite welcomed the government’s commitment to non-carbon nuclear power, but it said it should not allow China to build a plant in the UK, describing its nuclear technology as “unproven”.