The generator will be tested in the Humber Estuary near Grimsby and will be one of the first tidal power machines to supply the national grid.

If it is successful, it will be used to develop larger units which could generate enough energy to power 70,000 homes.

The machine will extract energy from underwater currents, via 11-metre long hydrofoils which move up and down like the tail of a dolphin.

Business Secretary John Hutton said: "Our continued support for these emerging technologies is essential if the UK is to cement its position as a world leader in marine technologies.

"I have made clear our commitments to renewable energy and to marine technologies. We will be doubling the support available for those technologies under the Renewables Obligation.

"This kind of tidal project, if proven, will go some way to helping the UK meet its ambitious targets for clean, green energy."

The Government will give £878,000 towards the project, which is being developed by Pulse Tidal Ltd.