LONDON (Reuters) - E.ON UK, Dong Energy and Masdar have agreed to push ahead with the London Array wind farm, giving a boost to the UK plan to build up massive offshore wind farms to meet its carbon reduction target.

Frank Mastiaux, chief executive of E.ON Climate and Renewables, told reporters via a telephone conference that the consortium would invest 2.2 billion euros ($3 billion) for the first phase of the world's largest offshore wind farm project.

The project for the 1,000 megawatt wind farm in the Thames Estuary near London had been threatened by falling UK power prices, the weakening pound and rising costs for credit as results of the global financial crisis.

The announcement came after the government said in its 2009 budget it would raise support for offshore wind farms under the Renewables Obligations Certificates (ROCs) scheme.

"The London Array is a flagship project in our drive to cut emissions by 80 percent by 2050 and meet future energy needs," said UK Prime Minister Gordon Brown, in a statement following the announcement from E.ON.

"The UK is a world leader in offshore wind farms, creating jobs and prosperity for the economy. That's why we have increased our support," Brown said, welcoming the decision.

Britain plans to build 30-35 gigawatts (GW) of wind capacity, including 20 GW offshore — compared with UK's current total generation capacity of about 75 GW — to cut its carbon emissions by 80 percent by 2050 from the 1990 level.

Denmark's Dong Energy A/S holds 50 percent in the project, E.ON 30 percent and Abu Dhabi's state-owned green energy firm Masdar, known also as Abu Dhabi Future Energy Co, has the rest.

Asked about the timing, Paul Golby, chief executive of E.ON UK, said: "The first renewable power will come in 2012. Maybe we can have the first green Olympics."

The first phase for 630 megawatt would be enough to power around 750,000 homes — or a quarter of Greater London homes — and cut 1.9 million tonnes of carbon emissions per year.

Mastiaux said Germany's Siemens AG would supply 175 turbines, which were 3.6 megawatt each, for the first phase.

The future of the London Array had been cast in doubt since May last year when Royal Dutch Shell pulled out, saying rising costs made it unclear if it would be profitable.

The wind farm will be built around 12 miles off the coasts of Kent and Essex to the east of London, comprising about 90 square miles.

The second phase, of which details are yet to be decided, will expand the total capacity to 1,000 megawatts.