The future ownership of Dungeness B nuclear power station was plunged into uncertainty on Friday with the surprise stalling of an expected French takeover of British Energy.

Electricite de France (EDF) announced that it was pulling out of the proposed £12 billion deal.

It said that "after in depth discussions, it considers that the conditions for a major development in Great Britain are not met to date". British Energy’s shares fell almost 6pc to 688p in early trading.

The announcement shocked energy experts and cast a cloud over the Government’s nuclear power strategy. It is understood that British Energy chiefs wanted more money than the French energy giant was prepared to offer.

In a statement, British Energy said: "Further to the announcement made on 24 July 2008, advanced discussions with a party have continued but without agreement to date. A further announcement will be made in due course. There can be no certainty that the discussions will lead to an offer being made for British Energy Group plc."

Although the Government, which owns a 35 per cent stake in British Energy, was happy with an anticipated 680p per share offer, some shareholders claimed that because of soaring energy revenues, EDF would be getting the company on the cheap. They were looking for closer to 800p.

Energy minister John Hutton said he was disappointed with the decision but hoped ongoing talks between the two companies would close the gap. He said the Government wanted to "put its foot down" on the nuclear energy programme.

The proposal also provoked concern that the country’s nuclear energy industry would effectively be owned by the French.

However, France has a long track record of this form of generation, and has invested heavily in nuclear power stations over many years. Some 80 per cent of the country’s electricity is generated by nuclear compared to 18 per cent in Britain.

Any deal would affect 570 British Energy workers in Kent, out of a total national workforce of more than 6,000.

Centrica, the owner of British Gas, was expected to take a 25 per cent stake in the deal, although a proposal by the Government to slap a windfall tax on energy companies may have given them cold feet.

British Energy owns and operates the advanced gas-cooled reactor on the Kent coast, and seven other nuclear power stations across the UK.

The British Government has signalled its commitment to nuclear energy, with a pledge to back a new generation of power stations as part of a mix of energy sources, including renewables, gas, coal and water.

Dungeness B, the so-called Cathedral of the Marsh - has been a prominent landmark for 40 years. But this first of a new generation of advanced gas cooled reactors is approaching the end of its life, although improvements and upgrades will keep it going until 2018.

However, a decision must be made by 2012 if a new nuclear power station is to be ready by 2018. Several designs exists for a proposed Dungeness C power station and British Energy has recently consulted residents over the proposals.