The consortium behind the UK Small Modular Reactor project has received £18m in an initial investment from UK Research & Innovation.
The companies behind the consortium, which is led by Rolls-Royce, are also to put in £18m.
Assystem, BAM Nuttall, Laing O’Rourke, National Nuclear Laboratory (NNL), Atkins, Wood, The Welding Institute (TWI) and the Nuclear AMRC are involved in the project.
By 2050, a full UK programme of up to 16 of these power stations could create up to 40,000 jobs, £52bn of value to the UK economy, and £250 billion of exports.
Paul Stein, chief technology officer for Rolls-Royce, said: "Tackling climate change requires collaboration across industries and governments to find effective, affordable and sustainable ways of achieving net zero by 2050.
"The consortium’s work with the government shows that action is being taken to decarbonise our economy and meet our society’s vital and growing power needs. This is a very positive step forward to this next phase of the programme."
The target cost for each station is £1.8bn by the time five have been built, with further savings possible.
Each power station will be able to operate for 60 years and provide 440MW of electricity, enough to power a city the size of Leeds.