The Government was today urged to continue trying to secure funds for a company to build components for the nuclear industry after it controversially withdrew an £80 million loan.
The planned loan to Sheffield Forgemasters was cancelled after a number of projects were reviewed shortly after the coalition Government took office.
The Business Select Committee said axing the loan, which had been announced by Lord Mandelson when he was Business Secretary, was an "easy cost saving", adding: "While this is a legitimate way to proceed, the department should have been more transparent in articulating this process and not hidden behind the simple defence of affordability."
MPs on the committee, which has been reviewing the Government's decision, said the UK would take a "significant lead" in the civil nuclear industry if Sheffield Forgemasters was able to build a 15,000-tonne press to make large components.
"For that reason we urge the Government to continue in its efforts to secure funding for this project, whether by public or private funds, so that an opportunity to take a lead in this important industry is not lost," said the committee.
MPs said they welcomed an undertaking given by Business Secretary Vince Cable that he would "entertain" a fresh loan application from Sheffield Forgemasters.
"Should the company make a further application, we would expect the Secretary of State to honour that undertaking," the committee added.
A Business Department spokesman said: "The department welcomes the committee's recognition that budget cuts were unavoidable and that the Government had difficult decisions to make.
"Sheffield Forgemasters is welcome to apply to the Regional Growth Fund which is now up and running. The Government is keen to see applications to the RGF which will enable the private sector to invest in projects that can create jobs and secure long-term growth."
Lord Mandelson said: "The committee's finding vindicates my decision to back Sheffield Forgemasters.
"This loan was agreed by independent advisers and approved by the Treasury. I hope that the Government will now accept its judgment was wrong and that they will back this essential investment in Britain's civil nuclear supply chain."
Labour industry spokesman Ian Lucas called on Deputy Prime Minister Nick Clegg to explain himself to the House of Commons.
Mr Lucas said: "This report is a humiliation for Nick Clegg, exposing that the arguments he put forward for withdrawing the Sheffield Forgemasters loan were simply not true.
"Nick Clegg needs to come clean and tell us why he failed to support a leading UK manufacturer based in his home city and why he put forward false arguments to justify his decision.
"The decision to withdraw the Sheffield Forgemasters loan was a massive missed opportunity to help develop British manufacturing. It is proof positive that this Government has no strategy for growth."