NATURAL heat thousands of feet below the earth's surface could see the Westcountry generate 2 per cent of Britain's electricity, the Government claimed last night as it unveiled a multi-million pound fund to develop the hot rocks technology.

Energy minister Lord Hunt announced £6 million would be ploughed into researching the potential to harness temperatures which could top 200 degrees Celsius.

The decision to invest public money in the new technology comes after intense lobbying from Westcountry companies and politicians who believe it could be a crucial addition to the region's green energy sector, alongside wind, wave and tidal power.

The money, part of the Department of Energy and Climate Change's low carbon investment fund, will be made available to researchers to find suitable sites.

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Lord Hunt said: "Deep geothermal energy is an exciting and innovative technology that could provide clean, low carbon and renewable power and heat for the UK. We want to make sure that this energy resource can play a part in the future low carbon energy mix.

"Deep geothermal power from the South West of England alone could meet 2 per cent of the UK's annual electricity demand, potentially creating thousands of jobs in the building and running of new power plants."

It is hoped the funding will build on research completed two decades ago, which found Devon and Cornwall have some of the highest underground temperatures anywhere in the UK.

The funding comes as Chancellor Alistair Darling urged the region to "start planning for the future" in developing technologies linked to a low carbon economy.

He told the Western Morning News: "There are huge opportunities for us in every part of the country, with the low carbon technologies we have got, for us to get jobs in the future."

Geothermal technology would see water pumped three miles underground where it could re-emerge at the surface at 200 degrees Celsius to be used to power a steam turbine.

Cornish peer Lord Teverson, who has lobbied the government to do more to support the sector, last night welcomed the investment.

He said he knew of at least two schemes in Cornwall which could benefit, but believes the potential could "certainly go as far up the peninsula as Exeter to make this technology work".

"It will be a real help. The Government has listened to a number of us who have been lobbying over the last 18 months. There is some real momentum, which for the South West is a really important thing. The great thing about geothermal is it's not intermittent. It's constant energy that goes on going."

Tony Batchelor, managing director of Falmouth firm GeoScience, said he had worked around the world on projects drilling deep into the ground but relished the prospect of a scheme "in our backyard".

"It has always been known that Cornwall is by far and away geographically the best place. It is still unproven that it can be done, so the Government support is really, really welcome."

Internationally, the USA and Australia have begun trying to tap into the potential for deep geothermal power to provide low carbon, non-intermittent energy.

At present there is only one geothermal energy station in the UK at Southampton, which used hot water pumped from 1,800m below ground as part of the city's district heating network.

Projects across England, Scotland and Wales can bid for the funding announced yesterday. There will be £4 million available this year and £2 million next financial year.

Tory shadow climate change minister Greg Barker said: "The Conservatives believe there is a huge potential for renewables in the South West, not just for offshore marine but also untapped geothermal energy. A Conservative Government would ensure that incentives are put in place to kick start investment in this emerging technology, which will help to create new jobs and ensure British companies are well-placed to develop and export this technology."