Japan has scrapped plans to generate electricity at a multi-billion dollar experimental nuclear reactor, the government said Monday, giving up on the decades-old project due to spiralling costs.

Once touted as a "dream reactor," the Monju facility was designed to generate more fuel than it consumes via nuclear chain reaction, an attractive alternative in a country with few natural resources.

But its complex fast breeder reactor technology has been plagued with problems that have left it idle for more than a decade. It has also been a financial black hole since construction began in 1986, given its initial 1 trillion yen ($8.5 billion) construction cost and daily operating costs of 50 million yen, even while shut down.

The government "will not restart (Monju) as a nuclear reactor and will take steps to decommission it," science minister Hirokazu Matsuno told the governor of western Japan's Fukui prefecture where it is located.

Fukui governor Issei Nishikawa, who was informed by Matsuno and industry minister Hiroshige Seko at a meeting, criticised the decision as "fast and sloppy".

"I don't think there were sufficient deliberations," Nishikawa said.

Japan has become increasingly nervous about nuclear power in the years since the 2011 tsunami disaster that triggered the Fukushima meltdown crisis, the world's worst such accident since Chernobyl in 1986.

While some local governors in Japan have opposed the restart of reactors, not all are opposed due to the economic benefits and jobs nuclear technology brings.

The Fukui government, for example, has been cooperative, partly in return for financial rewards from Tokyo.

Despite the decision to scrap Monju, the government has not completely given up on fast breeder technology.

The area around the Monju facility will be turned into a research centre for nuclear technology, including plans to explore a different type of fast breeder reactor, according to the ministry.

It will remain "a long term project" that will also involve cross-border joint research, it said.