Two of the "big six" energy companies have pulled out of developing new nuclear plants in the UK, in what was described as a "devastating blow" for the Government's energy policy.

RWE npower and E.ON said they would not proceed with their "Horizon" project, which looked to develop nuclear reactors at Wylfa in North Wales and Oldbury-on-Severn in Gloucestershire.

The German-owned companies said they were looking for a new owner for Horizon Nuclear Power in the light of a number of considerations, including the global economic crisis and significant costs of the project.

Gary Smith, of the GMB union, said: "This is a devastating blow which leaves the UK Government energy strategy in tatters."

The companies insisted their joint venture company Horizon's development projects were viable for another investor to develop nuclear sites, and confirmed they were committed to investing in energy schemes in the UK.

RWE npower said a strategic review in light of the global economic crisis and the accelerated phase-out of nuclear power in Germany, coupled with significant costs of running the joint venture, had led to the decision.

E.ON said its decision had been made against the backdrop of the group's wider financial constraints, but said it would be continuing to invest in Britain.

Responding to the announcement, Energy Minister Charles Hendry said: "E.ON and RWE's withdrawal is clearly very disappointing, but the partners have clearly explained that this decision was based on pressures elsewhere in their businesses and not any doubts about the role of nuclear in UK's energy future.

"The UK's new nuclear programme is far more than one consortia and there remains considerable interest. Plans from EDF/Centrica and Nugen are on track and Horizon's sites offer new players an excellent ready-made opportunity to enter the market."

Environmental groups seized on the news as evidence that nuclear power, which provides just under a fifth of UK electricity supplies, was not a viable option for the country's future energy mix. Greenpeace's policy director Doug Parr said: "The Government's energy strategy is crumbling."