Nuclear power projects such as Sizewell C in Suffolk will be granted green status under plans by Jeremy Hunt to unlock billions of pounds in funding for the industry.
The chancellor is expected to announce the change within weeks as part of a broader shake-up of the UK's financial rules on green energy.
It would see nuclear power projects classed as green or sustainable investments, clearing the way for more institutional investors and environment-focused funds to back them.
There are also hopes that the Treasury could fund new power plants with money raised through the government's green gilts and green savings bonds.
Generating nuclear power does not produce carbon dioxide, so the sector is seen as a key plank of Britain's plans to reach net- zero emissions by 2050.
The Telegraph says a recent review by former energy minister and Tory MP Chris Skidmore said that supporting the construction of more nuclear reactors was a "no-regrets" option.
Environmental concerns
However, the sector has faced difficulties portraying itself as environmentally friendly in the past because of concerns about nuclear waste, water usage, and the remote but catastrophic risk of nuclear accidents.
Top fund managers such as Legal & General and Aviva have previously expressed caution about the green credentials of nuclear, with Aviva chairman George Culmer last year saying there was an "ongoing debate".
Nuclear industry insiders believe classing projects as sustainable would clear up much of this uncertainty, because it would allow investments to count towards the environmental targets of investors and major companies.
However, they were left disappointed in 2021 when the government excluded nuclear power from the UK's green-investment framework.
Since then, the EU has given the technology its blessing and British ministers have suggested they now want to include nuclear in the refreshed investment guidance. However, in December they admitted plans to do so had been held up, blaming the "complexity" of the issue.
But a Whitehall source told the Telegraph that the proposals remain a "priority" and will be covered in a green finance strategy that the Treasury is expected to publish soon.
New nuclear key
A Treasury spokesman said: "New nuclear is key to Britain's energy security."
As part of the energy security strategy published last year, the Government is scrambling to boost the UK's nuclear capacity as part of plans to reach net zero.
The technology is seen as an important and stable source of electricity that will help to balance out more intermittent sources such as solar and wind, as the country winds down its use of coal and natural gas in the coming decades.
FTSE 100
The UK's top share index, the FTSE 100, was down four points at 7,949 shortly after opening this morning, following yesterday's six-point gain.
Brent crude futures were1.3% lower at $84.47 a barrel.
Companies reporting today
- Full-year results: Barclays, Heineken NV
- Half-year results: Dunelm Group, Hargreaves Lansdown