Britain has approved the Jackdaw North Sea gas field, ending years of legal and political wrangling that had pitted the Labour government's climate commitments against its push to bolster energy security.
Energy Secretary Miatta Fahnbulleh said the project would start to supply gas to British homes and businesses from as early as the end of October, helping to counter soaring energy prices stoked by the Iran war.
At the same time, she said a new Energy Wealth Fund would be established by the government with a Stg2 billion ($A3.8 billion) down payment to reinvest oil and gas revenues into the climate transition.
Fahnbulleh said Jackdaw would increase domestic gas production by about six per cent at its peak and have a lifespan of up to 11 years, boosting energy security and protecting jobs.
"At a time when people are really struggling, it's right that we look in a responsible way at maximising the existing energy reserves we have in Britain that could help," Prime Minister Andy Burnham said on Wednesday.
Burnham, who took office in July, has been trying to strike the right balance between helping voters with rising bills while also retaining the support of his own MPs who favour prioritising the environment.
By setting up the New Energy Wealth Fund, he will hope to appease those who believe that approving new gas fields is at odds with Britain's climate change commitments, and following Britain's hottest summer on record.
"Our approach will ensure we can boost our energy security, back British workers, ring-fence future North Sea proceeds to speed up the green transition, hit our ambitious climate targets and - crucially - bring down bills," Burnham said in a statement.
The Unite union welcomed the decision while the leader of the Green Party described it as "climate vandalism".
The government has not yet approved Rosebank, an oil field that like Jackdaw has also been in limbo for years after a 2025 court ruling temporarily blocked both developments.
In the past two years, US President Donald Trump has repeatedly urged Burnham to expand drilling in the North Sea to help lower prices, following the basin's sharp decline in production since its peak in the late 1990s.
Jackdaw is run by Adura, a joint venture between energy giants Shell and Norway's Equinor.