The two German firms were planning to build plants worth £10bn at Wylfa and Oldbury via their Horizon Nuclear Power joint venture.

They have pulled out following difficulties in raising finance.

Balfour Beatty and Laing O’Rourke are currently going head-to-head at Wylfa for the main construction contract.

One nuclear contractor said: “This is obviously very worrying news and we need assurances from the Government that they are committted to nuclear new build.

“A lot of contractors have invested a lot of resources following promises about this market which is seen as a major growth area for the next decade.

“The key issue is which reactor design is chosen by the client and a decision like that takes time and can put procurement timetables back ages.”

RWE and E.On are now looking for another backer to take over the two projects.

Dr Tony Cocker, Chief Executive of E.ON UK said: “We believe that for the right company Horizon remains an attractive project – but sadly, at this time, not for us.”

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 the 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.”