British Nuclear Fuels (BNFL) confirmed controversial plans to sell its US-based nuclear power station construction unit Westinghouse.
BNFL runs the Sellafield plant in Cumbria
The state-owned firm has already received some approaches, and a sale could raise about £1bn ($1.8bn).
Critics of the sale say it is shortsighted as many countries want cheap and environmentally-friendly nuclear energy.
At the same time, BNFL announced it had cut its losses by half to £144m.
BNFL said a sale makes sense if it is to deliver value to UK taxpayers.
"Our strategy review concluded that BNFL's businesses would be managed to deliver value and control risks to the UK tax payer," BNFL chairman Gordon Campbell said in a statement.
"In line with this strategy, we are starting a structured sales process for the Westinghouse business."
BNFL, which operates the Sellafield waste reprocessing plant in Cumbria and the UK's remaining older Magnox stations, said on Friday that it had already received a number of approaches for Westinghouse.
"It has reached all its targets, continues to win new business and is in an excellent position to capitalise on the China new build programme," said BNFL chief executive Mike Parker.
Energy expert Professor Ian Fells of the Royal Academy of Engineering, described BNFL's decision to sell Westinghouse as "mystifying".
"I and a lot of other people who follow the nuclear industry are mystified by this decision," he said.
"Westinghouse is being sold off just before it looks like starting to make a serious amount of money.
"China has announced that it is to build 40 nuclear power stations over the next 15 years, and President George W Bush has said nuclear power will be a core component of America's future energy provision."
He added that he thought the decision to sell could have been prompted by government pressure. Critics of nuclear power say it is dangerous and the high cost of storing spent fuel and decommissioning old power stations makes it expensive.
Dai Hudd, assistant general secretary of the Prospect union, which represents 6,000 BNFL staff, described the decision to sell Westinghouse as "bizarre", given increased demand for nuclear power.
"This is short-termism at its worst," he said.
BNFL also announced that it had cut its losses before one-off items to £144m in the year to 31 March, down from £283m for the previous 12 months.
This fall can be attributed to the fact that BNFL has transferred the majority of its liabilities to the Nuclear Decommissioning Authority (NDA).
The NDA has been charged with the decommissioning of the UK's ageing nuclear plants.
Half of the UK's 14 nuclear power stations are to be decommissioned between now and 2010, and by 2023 all but one - Sizewell B - will have closed.