Currently, operator liability is limited to £140m per incident. The UK is increasing this to €1.2bn (£1bn) so that more compensation will be available to a larger number of claimants.

This €1.2bn is €500m more than the minimum necessary under European conventions revised in 2004, whereby contracting parties made amendments to provide more compensation to more people for a wider scope of nuclear damage while shifting more of the onus for insurance on to industry.

The new level will be phased in over five years starting at €700 million when the new regime comes into force and increased annually by €100 million. The changes will apply to existing nuclear operators in the UK as well as any potential new build operators.

A liability level of €70m will apply to low risk sites (this is an increase from the current £10m) as well as €80m for low risk transport of nuclear substances.

This follows a public consultation held last year on the UK’s proposals to implement changes made to an international treaty on nuclear third party liability – the Paris and Brussels Conventions, to which the UK and most of the other EU countries are signatories.

“This is an important step in transferring the cost of nuclear third party liability from taxpayers to operators,” said Charles Hendry, Minister of State for Energy.

Mr Hendry added: “The revised Paris and Brussels Conventions to be implemented by the UK will mean more compensation will be available for a broader range of damage.”

The government intends to amend legislation to implement these changes later this year. The changes to the Convention will come into force when all signatory states have implemented the changes.

E.On and RWE npower pulled out of a £10bn deal to build nuclear power plants yesterday.