The energy minister has been briefed on plans to create a Wave Hub off the coast of north Cornwall.
The hub could generate up to 30 megawatts of power
A feasibility study on the revolutionary scheme is expected to be completed by the end of the year.
The South West Regional Development Agency (SWRDA) says initial findings are very encouraging.
Describing the wave hub as a 'unique marine initiative', minister Mike O'Brien says funding may be given if a business case can be made.
The government wants the UK to be producing 10% of its energy needs from renewable resources by 2010 and the region has been told it must find room for 280 wind turbines to meet energy targets.
The Wave Hub would act as an offshore electrical 'socket' connected to the national grid by an underwater cable, and could be positioned about nine miles off the north Cornwall coast in two years time.
It would be the UK's first large-scale wave energy project, allowing manufacturers to carry out tests before going ahead with the development of commercial projects.
Speaking at the Renewables Futures conference in Plymouth earlier this week, Mr O'Brien said:
"The South West is blessed with having one of the best marine resources in the world.
"My department has worked closed with Regen SW and the RDA on this project and it has become increasingly clear that it could play a significant role in the development of marine technologies in the UK."
A wave hub will cost between £6m and £9m, but Regen SW says getting the government's support in principle is a huge boost for the project.
The Wave Hub would act as an offshore 'socket'
The SWRDA has already invested £500,000 in the feasibility studies and believes it can make the necessary business case to the government.
Spokeswoman Claire Gibson said: "The minister is clearly very interested in the potential and said the Department of Trade and Industry (DTI) will consider funding support.
"The work we are undertaking with our partners aims to make that compelling case."
If successful, the hub could generate up to 30 megawatts of renewable energy.