Government-owned BNFL has beaten off stiff competition to win control of the nuclear interests of the major US conglomerate Westinghouse in a $1bn (pounds 600m) deal, according to US sources.
But although the deal is ready to be signed, the Government is understood to have expressed concerns about its implications, throwing the ambitious deal into confusion.
It is understood the Department of Trade and Industry has signed off on the deal but that the Treasury is concerned by the terms of the transaction.
Alistair Darling, chief secretary to the Treasury, studied the documents over the weekend but the matter has now been passed for personal consideration by Gordon Brown, the Chancellor.
The acquisition would make BNFL one of the largest British employers in the US and reinforce its role as an international player in the nuclear market. It could also pave the way for a change in the company's relationship with the British government.
There is a history of bad blood between BNFL and a Labour-run Treasury over the degree of financial autonomy the company is allowed.
A Department of Trade and Industry spokesman said last night: "There has been no deal as yet. Ministers haven't made a final decision, but if the deal does receive ministerial approval then any money that BNFL would need would have to be found from BNFL's own resources."
John Redwood, the Conservative trade and industry spokesman, said he would favour a sell-off but would not support any use of public money for the deal. "They should sell shares in the combined group in order to finance the purchase. They could structure a deal in such a way that over a period of time they made shares available as the money came in," he said.
Friends of the Earth said the deal raised the possibility that large quantities of nuclear waste from the US could be brought to Britain for storage or reprocessing.
Spokesman Dr Patrick Green said: "If BNFL is buying this reactor company because it sees a bright future for nuclear power they really do need to thing again. The world is moving away from nuclear power and the industry is pretty much bankrupt. It hasn't got a future."
BNFL was bidding with Morrison Knudsen, an Idaho-based US engineering company, against other consortiums including Bechtel, the US group, and Framatome, the French nuclear giant. The price is understood to be in excess of $1bn, taking account of Westinghouse's pension liabilities of more than $1bn.
The British Government is concerned about whether BNFL has the management capabilities to take such a momentous step. It also wants to investigate the potential liabilities the Government would be taking on. There are concerns about the environmental, financial and legal responsibilities that a purchase in such a sensitive sector by a state-owned company would involve.
Though there are no regulatory implications in the US beyond the normal requirements of anti-trust law, the deal would imply renewing agreements with the US Department of Defense and the Department of Energy, Westinghouse's largest customers, as well as other commercial nuclear operators.
By taking on Westinghouse, BNFL would become a key supplier to the US government. Westinghouse manages facilities for tritium production for US weapons programmes and handles spent nuclear fuel and decommissioned nuclear warheads from the US navy.
BNFL is already active in the US - BNFL Inc. has been operating for three years - but the deal will sharply shift the group's focus to North America. It is highly unusual for a company owned by a foreign state to be in this position. By globalising BNFL and making it a key player in the US market, the transaction raises big questions about its continued ownership by the British government, US corporate sources say. It may lead to changes in the structure of ownership, if not all-out privatisation.
The deal underscores that nuclear co-operation continues to be one of the core security and business links that constitute the transatlantic relationship.
Westinghouse Electric Company has 24,000 employees around the world, a substantial increase in BNFL's already important overseas activities.
Curbs on Sellafield, page 12
Business Outlook, page 19