The Chancellor George Osborne has agreed a £2 billion deal with China which will see China invest in the delayed Hinkley Point nuclear power station.
Making the announcement during a trade mission to China, Mr Osborne said the deal would allow French energy firm EDF to make the final investment decision.
Earlier this month, EDF delayed development of Hinkley Point, which was due to provide power from 2023. The energy company welcomed the news of the deal between the UK and China, but did not give any indication as to whether or not it would result in the project being put back on track.
EDF had been struggling to find a co-investor. It is understood that the UK government will act as guarantor for the investments made by Chinese companies.
Speaking in Beijing at a joint press conference with China's Vice Premier Ma Kai, Mr Osborne said: "We want the UK to be China's best partner in the West. [This guarantee] paves the way for Chinese investment in UK nuclear [to help provide] secure, reliable, low carbon electricity for decades to come."
The deal will help Britain and China to collaborate much more on energy projects, and includes a new £50 million nuclear energy research centre.
Hinkley Point is set to cost nearly £25bn when complete. And the UK government expects it to contribute 7% of the country's total energy needs.