The grants follow the creation of Great British Nuclear (GBN), a public body established to help deliver the UK's nuclear programme with the goal of providing 24GW of nuclear power by 2050.
Energy secretary Grant Shapps said the body will help to boost the UK's energy security and reduce dependence on "volatile" fossil fuel imports. The nuclear industry is estimated to generate around £6bn for the UK economy.
Companies can register their interest with GBN to participate in a competition to secure funding support to develop products including small modular reactors (SMR).
Unlike conventional reactors that are built on site, SMRs are smaller, can be made in factories and could transform how power stations are built by making construction faster, and less expensive.
Hinkley Point C, the UK's first nuclear plant in a generation, is expected to cost at least £32bn and generate energy at a far higher cost in comparison to renewables like wind and solar.
SMRs, on the other hand, should only require foundations that are 20-30 per cent of those for a Hinkley-like build, with much of the work going into creating an aseismic bearing for safety alongside minimal design changes for the reactor.
Another important difference with SMRs is capacity. Hinkley C and Sizewell C are 3,200MWe-capacity projects. Many proposed SMR projects are only expected to generate in the 220-440MWe range, equivalent to 150 wind turbines or an older coal-fired station.
The government eventually wants nuclear facilities to provide up to a quarter of the UK's energy needs by 2050 as part of plans to make the entire energy grid carbon neutral.
"By rapidly boosting our homegrown supply of nuclear and other clean, reliable, and abundant energy, we will drive down bills for British homes and make sure the UK is never held to energy ransom by tyrants like Putin," Shapps said.
"Today, as we open Great British Nuclear and the competition to develop cutting-edge small modular reactor technology, which could result in billions of pounds of public and private sector investment, we are seeing the first brush strokes of our nuclear power renaissance to power up Britain and grow our economy for decades to come."
Just over £77m of new funding will go to companies to accelerate business development in the UK and support advanced nuclear designs to enter UK regulation. Up to £58m in funding will be used for the further development and design of a type of advanced modular reactor (AMR) and next generation fuel.
AMRs operate at a higher temperature than SMRs. As a result, they could provide high temperature heat for hydrogen and other industrial uses alongside nuclear power.
A further £22.3m from the Nuclear Fuel Fund will be used for eight projects to develop new fuel production and manufacturing capabilities in the UK.
Minister for nuclear, Andrew Bowie, said: "I look forward to seeing the world-class designs submitted from all around the world through the competitive selection process, as the UK takes its place front and centre in the global race to unleash a new generation of nuclear technology."
