Italy is hoping to export 99% of its nuclear waste to the UK after public demonstrations made it impossible to find a suitable site on Italian soil.
The Italian government has 235 tonnes of spent fuel from the country's long decommissioned reactors in deteriorating stores.
Contracts worth £200m are on offer to British Nuclear Fuels (BNFL) at Cumbria to reprocess the nuclear fuel, provided the UK keeps the waste and the plutonium and uranium that would be recovered. The Italian nuclear industry was shut down after the Chernobyl disaster.
The Department of Trade and Industry cleared the way for the import of nuclear fuel and retention of overseas nuclear waste in Britain a week before Christmas, when rules insisting that waste should be returned to the country of origin were relaxed.
The government said retaining waste from half a dozen customers of BNFL would increase the revenue of the state-owned company by £680m, and this would go towards the £2bn a year clean-up costs.
Any plan to import waste from Italy is bound to be controversial because the UK has failed to find its own depository for waste and is not expected to have one for another 30 years. The government says that importing spent fuel for reprocessing and keeping the waste only adds a few per cent to the UK's waste that is already stored at sites round the country.
The department said yesterday that it had had no formal contact with the Italians over the proposed contract. A public consultation would be held before any new contracts were signed, and Patricia Hewitt, the trade and industry secretary, would make a final decision.
BNFL, which has told local groups in Cumbria that it had informal talks with the Italians in the summer, said yesterday that there had been no formal approach.
A decree allowing the export of waste was signed in Italy last month. Sogin, the Italian government organisation charged with dealing with the country's nuclear legacy, has said it will approach the UK next month when the decree becomes law.
The Guardian, meanwhile, is challenging the government's refusal to publish details of its contracts allowing Italy to send nuclear waste to Britain.
The DTI has claimed the information was too "sensitive" and would embarrass the Italian government.
Now the newspaper has submitted a request under the Freedom of Information Act which requires the DTI to respond within 20 working days.