But environmental groups claim carbon capture technology is years away from being commercially viable and relying on this technology will undermine UK efforts to meet greenhouse emission reduction targets.
UK Business Minister John Hutton said investments in carbon capture technologies would be necessary as fossil fuels would continue to play a "leading role" in power generation over the next twenty years or so.
"As a country we have to accept the reality that, even in meeting our EU 2020 renewables target, fossil fuels will still play a major part for the next couple of decades at the very least," Hutton said during a speech to members of the think-tank the Adam Smith Institute.
"And there is nothing wrong with that - provided we are meeting our international obligations to reduce our carbon emissions," he added.
The government would therefore take the necessary steps to aid the "rapid deployment" of carbon capture and storage (CCS) technology, Hutton said. As well as the plan to make CCS mandatory for new coal-fired power plants, a commercial scale demonstration plant is under way that will be in operation in the UK within seven years.
"The Government is intervening in the right way to help develop this breakthrough technology."
But Greenpeace said the rapid deployment of CCS technology would not be possible.
"CCS isn't close to being commercially viable yet, and may well not be for another decade, if at all," Greenpeace said in a statement.
"So any new coal plants built in the UK are likely to be pumping out vast quantities of CO2 for years to come, completely undermining the government's stated policy of reducing CO2 emissions by 80% by 2050."
Shadow Secretary for Business Alan Duncan also said focusing on CCS is inconsistent with the UK's emission reduction goals.
"CCS on a commercial scale is a good few years away and so in the short term there remains an insoluble conflict between building a coal-fired station and reducing emissions to meet our targets," Duncan said.
The UK Government's approval of CCS technology is particularly controversial as it is currently considering whether to grant a license for a coal-fired power generator in Kingsnorth in southeast England, which Greenpeace claims will be the first new coal-fired plant in Britain for 30 years.
Greenpeace says backing CCS technology will only pave the way for further coal-fired power plants to be built in the UK.