Finnish Trade and Industry Minister Mauri Pekkarinen said two permits to build nuclear reactors would be granted to power companies Teollisuuden Voima and Fennovoima, but an application from half government-owned Fortum was rejected.
Ministers emphasised that the plan should allow Finland to become entirely independent of electricity imports by 2020.
"It's historic that these decisions allow Finland to rid itself of foreign electricity imports after many decades," Pekkarinen said, declaring that the new decision would take Finland in a "radically carbon-free direction".
Last year, Finnish electricity imports from Russia hit an all-time high, according to Statistics Finland. Of all the electricity consumed in Finland, 15% was imported.
Four nuclear reactors generate around a quarter of the country's electricity. Finns have traditionally been among the most positive EU nations towards nuclear, but recent polls show that attitudes are hardening.
The building of the fifth reactor in Olkiluoto has been heavily criticised, as the project - awarded to France's Areva - has been repeatedly delayed and the Finnish regulator has voiced concerns about the reactor's safety.
The Green party is a fervent opponent of nuclear power, but its voice is an isolated one among its coalition partners.
The government is to take a final decision on the proposal next month, but no changes are expected. The bill could, however, face an uphill battle in parliament.
Ville Niinistö, chairman of the Green Parliamentary Group, said the government’s proposal could still change in parliament, reported Helsingin Sanomat, Finland's biggest daily newspaper. He argued that even many supporters of nuclear think two new plants is too much.
Environmental groups slammed the decision, arguing that building even one new reactor would make Finland the world’s biggest producer of nuclear waste per person.
Subsidies for renewables
The nuclear decision comes after the government on Tuesday reached agreement on a renewables package that would give hundreds of millions to developing clean energies.
The government said renewable energies would get €327 million per year by 2020. This would come on top of investment subsidies, which would amount to around €100 million per year.
The package aims to deliver Finland's obligations under the EU's Renewable Energy Directive to increase the share of renewables in its energy mix to 38% by 2020.
The lion's share of the required increase, 55%, would come from wood, and the rest from increasing the use of biofuel in transport, wind energy and increased use of heat pumps, the government said.
