The Government has announced plans to raise £2.2 billion by selling 400 million shares in British Energy - more than a third of its shareholding in the nuclear power group.

The move came just hours after Bill Coley, British Energy chief executive, insisted it had no idea when the Government would be making a decision on the future of its stake.

Results from the firm this morning showed annual underlying profits soared 44 per cent to £1.2 billion in the 12 months to March 31, triggering the first dividend payout for five years.

Alistair Darling, the trade and industry secretary, said he would be directing the Nuclear Liabilities Fund to take its interest in the group from 64 to 39 per cent.

The proceeds from the sale in the City, to be handled by Deutsche Bank, Citigroup and Merrill Lynch, will go towards the cost of the eventual decommissioning of the UK's nuclear power plant fleet.

A DTI statement added: "The secretary of state does not intend to direct the NLF to reduce its economic interest in British Energy ... to below a strategic interest of 29.9 per cent."

British Energy shares fell 19.25p to 550p.

Government bail outs have saved British Energy from near collapse in the past five years. Today's results were further confirmation of the group's recovery since.

The dividend is the first payout for shareholders since the group began a tortuous financial restructuring in 2002.

Mr Coley told the Times earlier today: “It’s been a good year, though it could have been much, much better if it hadn’t been for our well publicised operational challenges.”

Output from British Energy’s nuclear fleet plunged 15 per cent in the financial year after a safety review found higher than expected boiler tube cracking at Hinkley Point B and Hunterston B. This resulted in the loss of more than 9TWh of output, almost all the decline in the year.

One of the reactors at Hinkley Point B in Somerset has now restarted and Mr Coley insisted the full benefits of the group’s investment and improvement programme would come through in the next 12 months.

He welcomed last week’s Energy White Paper and said that it highlighted the role nuclear generation could play in a “low carbon economy”.

He added that private equity companies, rival utilities and electricity suppliers had all contacted the group about forming ventures to build the new generation of nuclear power plants in the UK.

He told the Times: “The interest is far broader and far deeper than I would have expected.”

He warned that the “UK could be at the back of the queue” unless firm decisions on new build were taken soon, but added that he wanted a full public debate on the role that nuclear energy should play.

Further negotiations with firms over “one or two” partnerships for new build projects will take place this year.

Mr Coley said: “The Government still needs to complete its consultation on new nuclear. I think that closes in October and that will provide some certainty.”

The government's stake sale is being carried out through a book-build, which is due to close at 4.30pm tomorrow. Lazard is advising the DTI on the deal.

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