Trade and Industry Secretary Patricia Hewitt said privately on Wednesday that a commitment to build new operations at this stage would be "crazy", the source said.

She told colleagues such a move risked putting more downward pressure on the weak power prices that precipitated British Energy's problems, and could compromise the government's plans to favour renewable energy solutions.

The last of Britain's ageing nuclear reactors is due to close by 2024. Experts say a decision on how to fill the gap they will leave needs to be taken soon.

The Department of Trade and Industry said the White Paper would address three main issues: safety and security of supply, costs to customers and environmental issues.

"Anything else about what is or is not in the bill is speculation," said a spokesman.

Hewitt's decision is a blow to her junior, Energy Minister Brian Wilson, who has championed the nuclear industry. Supporters of nuclear power say it is crucial for security of supply, and that its zero carbon emissions make up for the environmental hazard it poses.

Sources said Hewitt's decision appeared to be a late change of heart. It was made just before separate draft legislation linked to the British Energy rescue itself hit the desks of senior ministers and civil servants this week.

REBEL PROPOSAL

It comes amid growing disquiet in the Labour Party over the spiralling cost of the nuclear industry to the taxpayer, and at the start of a determined political campaign to change government thinking on the British Energy restructuring.

British Energy has survived on a state loan since September, when it went to the government for help. Market reforms aimed at stimulating competition had exposed overcapacity in the power market and pushed prices below its production costs.

Taxpayers already carry the responsibility for future nuclear cleanup costs of nuclear fuels company BNFL and the UK Atomic Energy Authority (UKAEA) in the state sector.

If the restructuring of British Energy goes ahead as planned, that 48 billion pound ($77 billion) undiscounted liability will rise by several billion pounds, as the liabilities of British Energy, privatised in 1996, return to the public sector.

Last week, a group of legislators launched a campaign to redraw the planned restructuring of British Energy.

The proposals are set out in an Early Day Motion to Parliament - a device which allows MPs to register protest, but which has no call on the government. So far, 27 MPs have signed it.

The rebel proposal advocates the early closure of BNFL's Thorp nuclear reprocessing plant at Sellafield on England's northwest coast, and a switch to storage of spent fuel instead, which they say is cheaper and safer.

Most of the estimated 150-200 million pounds a year cost to taxpayers of keeping British Energy afloat will go to subsidise reprocessing.

British Energy itself said last year that a switch to storage could save it more than 200 million pounds a year, but BNFL has said such a move is impractical.

British Energy bondholders are to discuss later on Thursday whether to accept the restructuring plan - which also leaves them severely out of pocket. Shareholders have watched 97 percent of the company's stock market value evaporate in 2002 so far and will see their holding diluted to between five and 10 percent in a debt-for-equity swap that is part of the plan.