"We need a coherent commitment to a long-term mechanism in the market which will encourage CO2-free forms of electricity generation," Adrian Ham, director general of the British Nuclear Industry Forum told a parliamentary trade and industry committee investigating energy policy.

The committee inquiry coincides with a government review of energy policy which will look at the future for nuclear power.

Nuclear supplies about a quarter of the UK's electricity but this is set to decline in coming years unless new plants are built to replace old ones due to close.

A recent slump in UK electricity prices has made it uneconomic to build new nuclear power stations and, unless the government intervenes, companies will choose to build gas-fired plants, the committee heard.

British Energy , the country's largest generator, said it generated electricity for 1.8 pence/kilowatt hour - on a par with UK forward power prices - but the cost of power from new nuclear power stations was at least 2.2 pence/KWh.

New costs are higher because they include full capital costs whereas British Energy's plants were built by the government and some of the costs were written off on privatisation in 1996.

British Energy said a premium for nuclear power of one pence/KWh would bridge the gap between power prices and new plant costs, and add a 0.25 pence/KWh to consumers' bills.

"This compares to the extra cost of 0.75 pence for renewables. Renewables have a much higher cost for consumers than nuclear," Mike Kirwan, director of strategy and business development at British Energy, told the hearing.

The government, keen to boost the green energy sector, has introduced rules from next year obliging electricity suppliers to buy a certain amount of power from renewable sources.

Nuclear companies also called on the government to make a decision quickly on whether to allow them to build new plants, saying slow planning procedures mean it can take up to 10 years from deciding to build a plant to it coming on line.