The company will now receive £275m of taxpayers’ money instead of £200m.
British Energy, which produces a fifth of the UK’s power, blamed the costs of Sizewell B and Heysham 1 as reasons for its cash problems.
Earlier this week bosses at British Energy claimed it was facing a short-term liquidity problem.
The department said the loan would only be available until February 2004 or until British Energy sold its interest in a US company, Amergen, whichever came first.
The loan will then be reduced back to £200m.
The department also said the money and subsequent interest would be repaid in full.
Political and economic uncertainty behind the fall in confidence
Just Racing Services, operating company of the Manor Racing Formula One team has entered administration
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Team Rock the publication of classic rock is in administration with FRP Advisory