The plant, to be built by a unit of Japan's Hitachi Ltd, would join Hinkley Point C in southwest England as part of a new generation of nuclear stations that London says it needs to replace ageing reactors and polluting coal plants.

However, private investors have proved reluctant to take on the huge costs of new nuclear plants, and the government has come under fire for agreeing to pay a price for electricity from Hinkley Point C that is way above rival power projects.

"For this project, the government will be considering direct investment alongside Hitachi and the Japanese government agencies and other partners," Greg Clark told parliament on Monday.

He said negotiations with Hitachi would now begin and a key focus will be on achieving a lower cost for consumers.

Hitachi's Horizon Nuclear Power plans to construct at least 5.4 gigawatts of new nuclear capacity at two sites in Britain – the first at Wylfa Newydd in Wales.

Clark said the move to consider direct investment in Wylfa came after government auditors recommended new financing models following the deal with France's EDF to build Hinkley Point C.

Criticism of that deal has increased as the costs for other sources of power, such as wind, have come down.

Britain’s latest auction for offshore wind subsidies, held last year, awarded contracts as low as 57.50 pounds per megawatt hour (MWh) compared with the Hinkley Point C deal of 92.5 pounds per MWh.

According to some estimates, Hinkley Point C could cost 30 billion pounds. Japanese reports have put the cost of Wylfa as high as 3 trillion yen ($27 billion).

On Tuesday, Horizon said it had submitted hundreds of documents to Britain's Planning Inspectorate, seeking a so-called Development Consent Order, which is required to begin construction of nationally significant infrastructure projects.

It had also applied for other licences and permissions and expects the process to be completed by the end of next year, Horizon spokesman Ben Russell said.

"We've always been clear that the financing and funding discussions are another important part of the jigsaw and we got that yesterday ... We think there's a lot of momentum behind the project," he added.

(Reporting by Andrew MacAskill; Additional reporting by Sabina Zawadzki; Editing by Alexander Smith and Mark Potter)

By Andrew MacAskill and Sabina Zawadzki