Taxpayers would pick up a tab for hundreds of millions of pounds in the event of a serious security breach at the Cumbria facility. One estimate puts the cost of Britain's previous nuclear clean-ups at around £83bn.
The winner of the contract, which will last for up to 17 years, is a consortium led by the troubled French firm Areva. It will be responsible for clearing 60 years' worth of highly toxic nuclear waste. The consortium expects to earn around £50m a year from the deal.
Areva has been under siege in France after two uranium leaks were discovered this summer. A leak last month at its nuclear site at Tricastin, southern France, led to an official inquiry. Uranium was subsequently found escaping from a ruptured pipe at a second plant.
A parliamentary answer by the Energy minister Malcolm Wicks, given just before Parliament broke for the summer recess, reveals that the Government has no limit on the risk to the taxpayer. His answer has not appeared on the online version of Hansard, the parliamentary record, as is usually the custom.
Mr Wicks said: "Whilst the impact of any call on the proposed nuclear indemnity could be very high, there is only an extremely small possibility of the indemnity ever being used ... There is no commercially available insurance."
The government agency that runs Sellafield, the Nuclear Decommissioning Authority (NDA), offered all four bidders for the contract an indemnity as part of the deal, protecting the private firms from footing the full cost of an incident at the facility.
The NDA, awarding the contract, claimed that, in line with a long-established convention, all companies involved in the bidding process had to insure themselves against the first £140m of the costs of an accident.
For MPs and environmentalists opposed to the use of nuclear power, the government guarantees to the private bidders was further evidence that it was "obsessed" with nuclear power.
Paul Flynn, the MP for Newport West, who asked the parliamentary question of Mr Wicks, said: "It is just the latest sign that the Government has been totally seduced by the Pied Piper of the nuclear industry. The Government is putting its faith in nuclear power, literally at any price."