The European Commission (EC) has begun an investigation into the creation of the Nuclear Decommissioning Authority (NDA) in Cumbria.
Sellafield is currently one of BNFL's main assets
It centres on the proposed £40bn transfer of liabilities from Sellafield operator British Nuclear Fuels Limited (BNFL) to the NDA.
The commission believes that removing BNFL's debts could be an illegal state subsidy.
Some 8,000 BNFL jobs are set to go in Cumbria over the next five years.
The NDA is due to be established in April 2005 and will oversee the decommissioning of the UK's nuclear facilities - including Sellafield.
Assets belonging to BNFL will be transferred to the NDA - effectively splitting the company in two.
The NDA will also take financial responsibility for liabilities at the UK's Atomic Energy Authority (AEA) sites.
An EC spokesman said it considered the advantage provided by the UK Government was likely to be state aid, which is forbidden under treaty rules.
However, the commission said the switch of liabilities could be allowed if it can be shown there are wider community benefits.
The spokesman said: "In view of the complexity and the novelty of the case, as well as the importance of the sums involved, the commission decided that an in-depth inquiry would be necessary in order to analyse the balance of the positive and negative aspects of the aid."
Until the investigation is complete, the UK Government has been told to set up a system so the NDA can still be set up, but without the transfer of BNFL's debts.
Energy Minister Mike O'Brien said the government would co-operate with the investigation.
He said: "We believe the NDA is compatible with EC state aid rules.
"We understand the importance of the state aid regime, fully support it, and understand the commission's desire to investigate.
"But we have taken necessary steps to ensure that the NDA can get on with its job from 1 April using existing resources."
A BNFL spokesman said: "The application for approval of state aid relating to the NDA's arrangements is a matter between the UK Government and the European Commission.
"We will fully support the UK Government during the investigation announced by the EC and will continue to move forward, as planned, towards the launch of the NDA."