German energy group E.ON confirmed that it has been buying farmland in south Gloucestershire as it pursues its plans to build a £4bn nuclear power station beside the River Severn.

As it battles with French company EDF to take control of and develop the British nuclear power industry, farmland around potential sites is expected to continue to attract the company's interest.

Although E.ON announced this week that it has put investment in new plants on hold, due to soaring financing costs and the economic downturn, it said its longer-term plans were unchanged. The acquisitions in Gloucestershire are understood to be around an existing Government-owned nuclear site at Oldbury-on-Severn that is due to be retired from service at the end of this year.

Buying extra land around this site could allow E.ON to build a far bigger EPR (European Pressurised Reactor), which would generate 1,600MW of electricity - enough to power a city of a million people.

E.ON is looking at other sites for new nuclear stations. The government's Nuclear Decommissioning Authority is selling sites at Wylfa, on Anglesey, and Bradwell, in Essex, and parts of the Sellafield site in West Cumbria for the development of a new nuclear power station. E.ON is also understood to have considered building a nuclear plant at Kingsnorth, on the Isle of Grain, Kent, where it is seeking consent for a coal-fired power plant.

The company is seeking regulatory approval for its proposed £12.5bn takeover of British Energy, the UK's largest nuclear generator, which would give it control of most of the preferred sites for new British nuclear power stations, but faces stiff competition from EDF.