The Japanese reacted with fury and insisted that BNFL should pay for the radioactive shipment of reprocessed plutonium pellets to be returned to the UK for disposal.

The shipment sparked angry protests

As diplomatic efforts continued the nuclear fuel rods sat unused in a Japanese port.

But now BNFL has agreed to pay for the shipment back to Britain, expected to cost several million pounds.

BNFL is also paying �40m in compensation to the Japanese customer, Kansai Electric.

In return Kansai is lifting its moratorium on new shipments of mixed oxide (Mox) fuel from Sellafield, opening up the way for around four billion pounds of future contracts put in jeopardy by the falsification scandal.

Environmental concerns

The chief executive of BNFL Norman Askew hailed the deal as "clearly a major step back to recovery".

He told BBC Radio 4's Today programme: "This starts the process of underpinning and giving us opportunities for something like �4,000m worth of new business, and I think that is the context in which you have got to set the settlement.

He acknowledged, however, that there was "an awful long way to go" and said BNFL was not complacent about the challenges it still faced.

But Greenpeace described the deal as the "worst of all possible options"

Spokeswoman Bridget Woodman said BNFL's decision to ship back the plutonium raised major environmental and international security threats and that BNFL was deluded over the extent of future business.

She said: "What you are looking at in terms of future Mox prospects is a very limited market for something that is extremely expensive, very difficult to handle and causes enormous safety problems."

Anna Walker, a senior official from the Department of Trade and Industry welcomed the lifting of the "shadow" over relations between Japan and the UK.

She said: "The UK Government is committed to co-operating with the Japanese government over the return of the fuel.

"There are a great deal of complex issues and the return will in practice take time, two to three years we believe."

Armed escort

Warships could be needed to protect the vessel from pirates interested in its nuclear cargo.

And permission will be required from governments around the world reluctant to allow such an environmentally sensitive shipment to pass through their territorial waters.

But Japan's Minister of International Trade and Industry Takeo Hiranuma said: "I welcome the fact that MITI and the British Department of Trade and Industry were able to agree on a policy of shipping back the MOX fuel to Britain."

Nuclear Installations Inspectorate, the UK's nuclear watchdog, released a damning report in February on the shipment, saying there had been "a systematic management failure" at BNFL.

The UK Government has already apologised to Tokyo over the matter and is now hoping to rebuild confidence in its nuclear industry.