The cost of building the controversial Severn Barrage will far exceed the mooted £21 billion price tag, the Government has admitted.

Linking up the Cardiff to Weston power generator to the National Grid will add a further £2 billion alone.

On top of that, officials are working out how much money they will need to allocate for environmental costs such as changes to flood defences.

Sarah Rhodes, the Government's director for the Severn tidal project, said: "There are things like grid costs we will need to factor in any environmental costs; for example, if there are changes to flood defences, that too would be a cost on the project. There are a whole series of different calculations that will be made and we will see where that figure comes out."

Earlier this year, the Government announced it had reduced the list of ways to harness power from the estuary from 10 down to five, which includes two small-scale barrages, two lagoons and the 10-mile barrage between Cardiff and Weston.

It would produce five per cent of Britain's electricity but although it is a clean form of energy generation, it has attracted widespread criticism from campaigners who claim the impact building it would have on the environment and wildlife outweighs future benefits.

Power produced by the barrage would be "expensive electricity" for the first 40 years as the capital costs were paid off but would then become cheap to provide, the Commons energy committee was told yesterday.

Energy Minister Lord Hunt said the only way to build the project, which would be one of the largest construction schemes in the world, was with a mix of public and private cash.

He said: "Inevitably there is going to have to be public finance involved, certainly in the Cardiff Weston scheme because of the sheer size of the scheme and the capital cost. The evidence for the smaller schemes is they could be financed and run by the private sector. Part of the work that we are now doing is looking at those options.

"Generally the energy sector is run in the private sector but with Government regulation and through the renewable obligation incentives put in place to encourage the development of renewables.

"The scale of what is being proposed here goes very much beyond what we have been dealing with in the past.

"It is quite clear in the case of Cardiff Weston there is going to need to be public money in terms of availability of capital. It's also clear that the cost of the electricity generation that this will not be viable without support."