Environmentalists immediately condemned the decision, saying it would allow for billions of euros of taxpayers' money to be wasted on the nuclear industry.

The EU executive said it was satisfied that subsidies under the five-billion-pound (7.4 billion euro, 9.0 billion dollar) rescue were solely to support the costs of decommissioning nuclear plants.

"Today's decision demonstrates the commissions ability to apply competition rules in newly liberalised energy markets with great success," said EU competition commissioner Mario Monti.

"The outcome of this case takes full account of the comments made by British Energy's competitors and the need to ensure security of supply at all times," he added.

Under the terms of the approved restructuring plan, British Energy will ring-fence the nuclear generation capacities which are the only branch of its activities that are entitled to benefit from state aid, said the Commission.

It said that ring-fencing would mean that British Energy would create three separate businesses which have each their own separate accounts.

"There will be the business dealing with nuclear generation, another unit dealing with non-nuclear generation and a third unit dealing with direct sales to large business customers," it said.

But environmental group Greenpeace slammed the decision. "It is staggering that the Commission has allowed subsidies to British Energy," said the group's Jan Vande Putte.

"This decision allows for billions of euros of taxpayers' money to be squandered on an unsafe energy system, run by a company which is not capable of making itself viable without a massive financial prop," he added.

Green MEPs in the European Parliament also lashed out at the decision to save what it called a "nuclear dinosaur."

"This decision is a disaster. It will artificially lower the costs of nuclear electricity by injecting billions of Euro from Europe's taxpayers who in the majority oppose nuclear power," said Greens deputy Claude Turmes.

"It sends other nuclear operators the signal that they are 'too big to die' and will open the door for nuclear operators in other parts of Europe to go begging for billions of euro for their own nuclear waste liabilities," he said.

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