The current station is due to stop producing electricity in 2010
Wylfa nuclear power station on Anglesey has been given the go-ahead to produce electricity for an extra nine months.
The plant was due to close in March 2010 with the loss of hundreds of jobs, but will now carry on until at least December 2010.
At current prices the extension is worth £100m in electricity sales.
The Nuclear Decommissioning Authority (NDA) owns the site which was recently earmarked as a potential location for a new nuclear power station.
The decision to allow the extension was taken by the Government's Department of Energy and Climate Change (DECC).
NDA acting chief executive Richard Waite welcomed the announcement.
"Wylfa's continued generation is good news as it ensures further benefit from one of the NDA's valuable assets," he said.
"The income generated over the extension period will be utilised to support our clean-up mission and Wylfa will continue to contribute to the UK's electricity supply, as it has done for the last 38 years."
Mr Waite said he wanted to thank the site contractor at Wylfa, Magnox North, for the work they had done to help make the extension possible.
Magnox North employs 650 people on the site, while up to 500 contractors and members of the supply chain provide support to the site.
Anglesey council's deputy leader, Councillor Bob Parry welcomed the announcement.
"Wylfa power station is one of the island's biggest employers, providing well paid quality jobs for many local people," he said.
Mr Parry added that he hoped the extension would have a positive effect on negotiations to try and broker a new energy price deal for metals company Anglesey Aluminium.
The company's existing power deal ends in September 2009, and with no new deal in place, some 500 jobs at the Holyhead smelter currently hang in the balance, he added.