Prime Minister David Cameron said: "As part of our plan to help Britain succeed, after months of negotiation, today we have a deal for the first nuclear power station in a generation to be built in Britain.
"This deal means £16 billion of investment coming into the country and the creation of 25,000 jobs, which is brilliant news for the South West and for the country as a whole.
"As we compete in the tough global race, this underlines the confidence there is in Britain and makes clear that we are very much open for business.
"This also marks the next generation of nuclear power in Britain, which has an important part to play in contributing to our future energy needs and our longer term security of supply".
Energy Secretary Ed Davey has hailed a landmark deal to build Britain's first new nuclear plant in a generation.
But ministers are likely to face criticism over the report price that will be paid for electricity produced at the Somerset - around £90.00 per megawatt hour according to reports - which around double the current market rate.
"We think it would be good value if (the strike price) was a little higher," the Liberal Democrat Cabinet minister said.
"I was determined to get them below £90 so I could prove to everybody we had got a good deal...
"What has driven a tougher deal is the fact that I made clear we could walk away from the table. We had other nuclear options."
Chancellor George Osborne has announced that the government is to give the go ahead to Chinese firms taking a stake in the development of the next generation of British nuclear power.
He made the announcement at Taishan nuclear power station in Southern China on the final day of his visit to China.
The Chancellor said: "Today is another demonstration of the next big step in the relationship between Britain and China - the world's oldest civil nuclear power and the world's fastest growing civil nuclear power.
"It is an important potential part of the government's plan for developing the next generation of nuclear power in Britain. It means the potential of more investment and jobs in Britain, and lower long-term energy costs for consumers."
The Chancellor George Osborne will agree a deal this week that will see a Chinese firm become one of the main players in the building of a new nuclear power plant for Hinkley Point. It's a move that is welcomed by businesses in the area that will benefit.
Bob Constantine reports.
The Government announced in 2010 that Hinkley Point was one of 8 sites suitable for a new reactor. Then in 2011, EDF submitted a plan for development of a new reactor at the site, Hinkley Point C, and a new nuclear licence was awarded in 2012 - the first since 1987.
But since then the Government and EDF have been negotiating over the proposals, with a major sticking point being the guaranteed price paid for energy produced by the new reactor.
If the construction goes ahead the reactor could supply up to 7% of the country's energy needs.
The Energy Secretary Ed Davey has hinted that a new deal to build a reactor at Hinkley Point is close. Speaking at the weekend he said that Britain's energy sector was set to benefit from billions of pounds of investment from the Far East.
Mr Davey said "The Chinese, along with the Japanese and the Koreans are very interested in the opportunities in the British nuclear sector. I think it is really possible we will see massive Chinese investment".
Recent reports have suggested that the Chinese are set to take a stake in the consortium seeking to build the new reactor at Hinkley Point in Somerset
The leader of the union representing 21,000 workers in the nuclear decommissioning and energy supply industry has called on all parties involved in negotiations to redouble their efforts to reach agreement on a strike price for electricity generated by the planned Hinkley Point C in Somerset.
Alan Leighton, the National Secretary of Prospect, made his comments following today's announcement from EDF that it plans to scale back on preparatory work for the project and reduce the number of people working on it in a bid to control costs.
"Our members' fear that any delay in the preparation work could impede or delay EDF's ability to bring the project to fruition once agreement has been reached.Prospect is committed to an appropriate energy mix for the UK, including gas and renewables, but it is undoubtedly the case that nuclear and nuclear new build will be pivotal if we are to achieve the twin goals of capacity and security of supply.
We hope that this announcement will encourage all involved in the talks to redouble their efforts to agree a strike price. Particularly as it comes so soon after the recent warning from outgoing Ofgem head, Alistair Buchanan, that we are facing an imminent capacity crunch in the UK unless urgent action is taken.Without an agreement we risk losing a once-in-a-generation opportunity to meet the country's decarbonisation targets and help build a new economy that provides good quality jobs and growth for the UK."
EDF Energy has revealed that it plans to reduce its workforce at the site of the proposed Hinkley Point C project.
The announcement comes as the company continues to negotiate with the Government on how much it will be paid for electricity when the new station eventually goes on stream.
The company says this will help it to control costs "ahead of securing the financing necessary for the project."