The scheme could produce enough electricity to supply 200,000 homes.

But backer Peel Energy said the tidal power project is not financially viable without a change in renewable energy policy.

A study by Peel and The Northwest Development Agency identified the preferred site of a barrage across the river between New Ferry (Wirral) and Dingle (Liverpool).

Turbines within the barrage would generate power from ebb and flood tides and the scheme would include a visitor centre, a pedestrian / cycle path, a light public transport link and a tidal turbine research centre.

But the study found that the estimated £3.5bn upfront construction costs result in a cost of electricity that is not competitive in the current energy and capital markets.

Anthony Hatton, Peel Energy’s Development Director, said: “In the longer term, once the upfront capital costs have been paid off and for the rest of its 120 year life, the cost of electricity would be very competitive.

“But the preferred scheme is unlikely to attract the necessary investment while the emphasis in the financial sector and renewable energy incentives is on technologies that provide short to medium term returns.

“We need to identify an appropriate funding structure that recognises the long term low cost of electricity, security of supply and wider economic benefits that investments such as this provide for future generations.”

Peel Energy said it “will not be progressing the development work until it has confidence in the financial and regulatory framework for tidal power.”