Britain is considering "generous" tax breaks for shale gas exploration to encourage investment in the industry, finance minister George Osborne said Monday.

His announcement came as the coalition government's energy minister said he hoped to be able to lift a suspension of the controversial shale extraction technique known as fracking after a series of small earthquakes.

"We are today consulting on a generous new tax regime for shale so that Britain is not left behind as gas prices tumble on the other side of the Atlantic," Osborne told the annual conference of his Conservative party.

He said that while Britain's government would invest in renewable energy it was important to keep "opening up the newly discovered shale gas reserves beneath our land."

The Treasury said it would now speak to business about a "targeted tax regime" for shale.

It said a successful British shale industry could create jobs and support energy security, adding that it had followed a similar example with North Sea fossil fuel reserves.

Britain's only operative shale extraction site in Lancashire's Fylde coast in northwest England halted work in 2011 after fracking was believed to have caused two small earth tremors.

But energy minister Ed Davey said separately on Monday that he believed it was time to end the suspension.

"In the context of the Government's green light for carbon capture and storage of fossil fuel plants and in the light of evidence of the best regulatory regime, I hope it will prove possible for me to give a green light to shale," he told an industry conference in London.

Business lobby group the Confederation of British Industry (CBI) welcomed Osborne's proposals to encourage share gas exploration.

"It makes sense to maximise the amount of energy we can produce at home at reasonable cost," said CBI director-general John Cridland.

"Incentivising the exploration of shale gas sits alongside investment in renewables. I don't want all my eggs in one energy basket."

However, environmental groups rejected Osborne's plan, saying the government should focus more on renewable energy.

"Generous shale gas tax breaks show the Chancellor clearly isn't listening to the increasingly vociferous warnings from leading politicians, businesses and climate experts about his reckless dash for gas," said Craig Bennett of Friends of the Earth.

Hydraulic fracturing or fracking is the drilling of underground shale rock formations by injecting chemicals and water to release trapped natural gas.

Opponents say it causes water pollution but energy groups say it provides access to considerable gas reserves and drives down prices.