The two companies will now become 50:50 partners in the project, which, when built, could generate enough power to supply a quarter of Greater London homes.

Dr Paul Golby, chief executive of E.ON UK, said: "We're pleased that, together with DONG Energy, we've been able to secure the future of the project, and we'd also like to thank Shell for their contribution to the project's significant progress to date.

"That also means that we hope to be able to keep the project on track and we should be able to complete the first phase by the end of 2012, subject to securing a number of important contracts, such as those for the wind turbines.

"We believe that offshore schemes such as this have an important part to play as we look to ensure security of supply for the UK, reduce carbon emissions and keep energy as affordable as possible for our customers."

Mike Lewis, managing director Europe of E.ON Climate & Renewables, said: "This deal underlines our commitment to offshore wind, not only in the UK but across the world.

"However, while the economics of this project remain challenging, we believe this flagship project will give us invaluable experience as we go forward with the next generation of offshore projects.