A new MOX plant is needed to reuse the country's large stockpile of separated plutonium, the Royal Society has said.
The recommendation of the Royal Society's report comes just a few months after the government-owned Nuclear Decommissioning Authority (NDA) announced it would close the MOX plant at Sellafield.
The report says that plutonium should be converted into MOX fuel for possible use in a new generation of thermal light water reactors.
"This is the only way of dealing with it which is reliable," said Roger Cashmore, chair of the Royal Society working group and head of the UK's Atomic Energy Authority.
Plutonium is a by-product from the use of uranium fuel in reactors, and is found in used or spent fuel when it is removed from a reactor.
It can be extracted by reprocessing and can then be reused to make MOX fuel or stored.
MOX fuel is seen as attractive because it is a way to use surplus plutonium which would otherwise be stored as nuclear waste or might be stolen to make dirty nuclear weapons.
However, the market for reprocessed fuels for use in nuclear reactors has diminished after the biggest customer, Japan, experienced the crisis at its Fukushima plant in March.
Building and running such plants is also costly.
Britain has the largest stockpile of separated plutonium in the world at 112 tonnes, which undermines its credibility in non-proliferation debates and poses a serious security risk, the report said.
This is set to increase further in the future if nothing is done about existing waste as the government plans to build 16 gigawatts of new nuclear capacity by 2025.
This week the UK energy and climate minister Chris Huhne said the country has around 6,900 cubic metres of high-level nuclear waste, and the government spends £2bn a year managing it.
"My department has just finished consulting on the long-term management of our plutonium stockpiles, and will publish the results shortly," he said.
The Royal Society also advised the government to reconsider its plan to stop its reprocessing activities once existing contracts have been fulfilled.
Sellafield's THORP reprocessing plant's lifetime could be extended and investment made to refurbish it, the report said.
"Economic considerations would play an important role in deciding the scale of this investment since a new reprocessing plant may even be necessary," it added.
Without putting a cost on building a new MOX and reprocessing plants in the UK, the report said it cost £3bn to build THORP and the Rokkasho reprocessing plant in Japan cost several times that amount.
France already uses MOX fuel in most of its 900 megawatt nuclear reactors, which make up around half of its 58-reactor fleet.
A couple of years ago, an NDA report estimated it would be more economical for the UK to build its own MOX plants than to transport plutonium to France to be converted into MOX, the Royal Society said.