Ministers are to discuss giving themselves the power to take control of the struggling nuclear power group British Energy.

Despite a huge loan from the government, the company is still facing bankruptcy.

It is the first Thatcher legacy that has been rolled back and I think a lot of Labour MPs would welcome that Tom Watson Labour MP

The firm could share a fate similar to Railtrack - ministers are considering converting it from a private company to a non-profit making organisation like Network Rail.

Last month, British Energy - which produces about a fifth of the country's electricity - revealed losses of �337m ($518m) before taxes in the six months to September 2002.

It has been hit hard by a 40% decline in electricity prices since the wholesale power market was liberalised last year.

Law to be rushed through?

Labour MP Tom Watson told the BBC: "The government are just not going to be prepared to throw hundreds of millions of pounds at failed private companies, particularly when they have given so much away to shareholders over the years.

"So they can't carry on the way they are with BE. They can bring it back into public ownership, find new models of ownership in months and years to come."

Next week, new laws are set to be rushed through the Commons to allow British Energy, privatised by the Thatcher government, to be taken into administration.

Mr Watson added: "It is a highly significant piece of legislation. It is the first Thatcher legacy that has been rolled back and I think a lot of Labour MPs would welcome that."

Building freeze?

Senior ministers, meanwhile, will consider the issue at a special Cabinet sub-committee on Thursday which is drawing up a new energy white paper.

It is expected to announce a freeze on the building of new nuclear power stations and to outline plans to increase the use of greener fuels to produce electricity.

Without a retail arm to cushion the blow, British Energy has struggled to stay afloat.

US selloff

In a statement back in December it said any collapse would mean no return for shareholders, and little for creditors.

As part of an overhaul strategy mooted last year, the government would underwrite British Energy's hefty nuclear waste processing costs.

The company is also attempting to raise cash by selling off its US and Canadian subsidiaries AmerGen and Bruce Power.