Crisis-struck British Energy saw its shares collapse on its return to the stock market yesterday, as the group's future continued to hang in the balance despite a £410m Government loan.

Shares slumped 65 per cent by the close of trading, knocking more than £300m from the group's value and leaving it priced at under £200m. Its shares fell 52p to 28p.

The loss-making group, which provides a fifth of the UK's power, has been hit by the sharp fall in electricity prices and a shutdown at one of its power stations.

Last week, shares were suspended when the group warned it could face insolvency if it did not receive immediate financial assistance.

The crisis prompted concerns that lights could go out across the UK and that jobs could be lost, and led to the £410m loan from the Government. However, the package is only a short-term solution and the group still needs to find a long-term answer to its problems.

British Energy said yesterday's agreement would mature in less than three weeks.

It was expected that talks regarding longer-term restructuring would start shortly, but British Energy warned that if these talks failed it could still face insolvency.

Andrew Fisher, an analyst at fund manager Gerrard, said: ''The finance package is only short-term. Longer term, more deep-reaching restructuring is obviously required. It remains to be seen what the outcome of these negotiations will be and what part or involvement equity shareholders will have.''

Trade Secretary Patricia Hewitt said the Government could not rule out the possibility of the company going into administration and reiterated there would be "no blank cheques" written for the company.

''We are working towards a possible restructuring of the company in the private sector, although we clearly cannot rule out the possibility of administration. This deal is primarily about securing energy for Britain, not securing British Energy," she said.

The move was however sharply criticised by green groups.

Bryony Worthington, nuclear campaigner at Friends of the Earth, said: ''This financial fiasco must force the Government to realise the folly of building new nuclear power stations. They are uneconomic, unsafe and deeply unpopular and are not needed to combat climate change.''

A spokesman for Greenpeace said: ''This is another misuse of taxpayers' money which has more to do with protecting political careers than keeping the lights on.''

But union leaders welcomed the move, saying it should safeguard the group's 5,200-strong UK workforce.

John Edmonds, general secretary of the GMB said: ''We now need a complete rethink of the role of the private sector in major UK utilities."