Sarkozy, who has made exporting French nuclear know-how a priority of his presidency, made the announcement during a speech on energy policy at an ArcelorMittal steel factory in central France.

France's first European Pressurised Water Reactor (EPR) -- one of only two under construction worldwide -- is being built by utilities giant Electricite de France (EDF) in Flamanville in northern France, set for completion in 2012.

Sarkozy said a new site would be chosen next year for the EPR, designed by French giant Areva as a safer and cleaner model of nuclear reactor, with construction to start in early 2011.

EDF, which operates France's 58 existing nuclear plants, immediately issued a statement welcoming Sarkozy's decision and saying it was "prepared to commit to this project".

But there were immediate protests from French environmentalists and anti-nuclear campaigners, who accused Sarkozy of reneging on a pledge to invest in renewable energy sources.

The president, who was accompanied on the factory visit by Areva chief executive Anne Lauvergeon, staunchly defended his choice.

"The days of cheap oil are over. More than ever, nuclear is an industry for the future and an indispensible energy source," Sarkozy said.

"It's not a choice between nuclear or renewables, but nuclear and renewables," he said.

He argued that nuclear power produced electricity 30 to 50 percent cheaper than either gas or coal, and that replacing a coal plant with an EPR would cut some 11 million tonnes of global warming emissions per year.

"We can be electricity exporters when we have neither oil nor gas. This is an historic chance for development."

The world's second producer of nuclear energy after the United States, France is vying to lead a worldwide revival of the industry, fuelled by worries about global warming and rising energy prices.

Nuclear power accounts for 87 percent of France's electricity production and its national champions EDF and Areva are world leaders in their field.

But Greenpeace savaged the decision to build a second EPR as "shocking", "stupid" and a "serious mistake".

France's Green Party attacked the EPR as "useless, dangerous and expensive," saying the estimated three-billion-euro (4.75-billion-dollar) cost would be better spent on renewables.

"France is becoming a nuclear show-room for Sarkozy the sales rep and Areva," it charged in a statement.

French anti-nuclear group Get Out of Nuclear called for a demonstration in Paris on July 12, the day before a summit of Mediterranean leaders in Paris, several of whom have struck nuclear cooperation accords with France.

Since Sarkozy's election last year, France has signed agreements on developing nuclear power with Algeria, Morocco, Tunisia, the United Arab Emirates, Libya and Jordan.

Areva, French oil giant Total and energy group Suez have partnered up to supply two EPR reactors to the United Arab Emirates.

And in November, Areva struck an eight-billion-euro (12.7 billion dollar) deal to provide two EPR reactors and nuclear fuel to China, the biggest single contract in civilian nuclear history.

Areva, along with German engineering group Siemens, is currently building the world's first EPR in Finland. But the project has run into delays linked to the quality of the concrete used, and is expected to go into service 18 months late, in 2011.

Cement-pouring work at the French reactor in Flamanville also had to be halted in May after "anomalies" were detected at the facility.

France's nuclear safety authority flashed a green light this month for construction to resume after EDF beefed up its technical inspections.

EDF has said it is confident the Flamanville plant will enter service as planned in 2012.

France's 58 current reactors will begin to age out of operation beginning in 2015.

The EPR, developed in the 1990s by Siemens and a subsidiary of Areva, is said to use 17 percent less fuel than current types of reactor and is designed to generate power for 60 years.

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