The cost of decommissioning and cleaning up the Sellafield nuclear site in Cumbria has increased by £5bn to £53bn, says the National Audit Office.
Margaret Hodge MP, chair of the Public Accounts Committee (PAC) which commissioned the report, said the cost hike was "astonishing."
A year ago, the Nuclear Decommissioning Authority, the body responsible for the clean up, said the cost would be £48bn.
The work is also behind schedule, the report said.
The Authority gave the £9bn Sellafield clean-up contract to Nuclear Management Partners (NMP), but following criticism of NMP's competence, decided in January to cancel the contract.
"It is galling that breaking the contract will cost the public purse £430,000," said Mrs Hodge, whose committee recommended the Authority consider doing this a year ago.
The Nuclear Decommissioning Authority, the Department of Energy and Climate Change, NMP, and Sellafield Ltd. are due to appear before the Committee on 11 March.
Mrs Hodge said she expected them to "tell me how the escalation in cost of cleaning up Sellafield will be stopped and performance put back on track."
Chris Jukes, regional officer of the GMB union, said: "GMB has been absolutely clear all along that the NMP model did not work at Sellafield.
"Poor value for money, poor top NMP management and a lack of grip on key issues in an essential area for the UK energy sector, as well as the UK economy, have led to unbelievable decisions on expenditure."
In 2008, the Authority gave the contract to NMP, as parent body of Sellafield Ltd, the site's licensed operator.
But in February 2014, the PAC concluded that: "The Authority has not demonstrated why, given the lack of risk transferred to (Nuclear Management Partners) this 'parent body' arrangement at Sellafield provides value for money."
Under a new structure, the Authority will take back ownership of Sellafield Ltd.
The total cost of cleaning up the UK's 17 nuclear sites is "around £70bn", the NAO says.
Sellafield is the "UK's largest and most hazardous nuclear site", including two nuclear fuel reprocessing plants, waste management and storage plants, as well as storage ponds and silos containing waste from the UK's first nuclear plants.
The Authority aims to clear the site by 2120.