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* Decommissioning Monju reactor to cost a further $3.2 bln
* Monju beset with accidents, missteps since construction began
By Osamu Tsukimori and Aaron Sheldrick
TOKYO, Dec 21 (Reuters) - Japan on Wednesday formally pulled the plug on an $8.5 billion nuclear power project designed to realize a long-term aim for energy self-sufficiency after decades of development that yielded little electricity but plenty of controversy.
The move to shut the Monju prototype fast breeder reactor in Fukui prefecture west of Tokyo adds to a list of failed attempts around the world to make the technology commercially viable and potentially cut stockpiles of dangerous nuclear waste.
"We do not accept this," Fukui Governor Issei Nishikawa told ministers involved in the decision.
"This abrupt change in policy breeds deep feelings of distrust for the government," said Nishikawa who strongly backed the project because of the jobs and revenue it brought to a prefecture that relies heavily on nuclear installations. He said decommissioning work for Monju would not start without local government approval.
Four conventional commercial nuclear stations lie in close proximity to Monju, earning Fukui the nickname "nuclear alley."
Those like most other nuclear stations in Japan remain closed pending safety reviews or decisions on decommissioning after the Fukushima nuclear crisis of 2011 led to the eventual shutdown of all reactors in the country.
The Fukushima crisis sparked strong anti-nuclear sentiment in Japan, making it harder to pursue projects like the Monju facility which has faced accidents, cover-ups and regulatory breaches since construction began in 1985.
The plant was built to burn plutonium derived from the waste of reactors at Japan's conventional nuclear plants and create more fuel than it used, closing the so-called nuclear fuel cycle and giving a country that relies on overseas supplies for most of its energy needs a home-grown electricity source.
With Monju's shutdown, Japan's taxpayers are now left with an estimated bill of at least 375 billion yen ($3.2 billion) to decommission its reactor, on top of the 1 trillion yen ($8.5 billion) spent on the project.
Japan is still committed to trying to make the technology work and will build a new experimental research reactor at Monju, the government said.
But critics within the ruling Liberal Democratic Party (LDP) think it will be another futile attempt.
"We need to terminate the impossible dream of the nuclear fuel cycle. The fast breeder reactor is not going to be commercially viable. We know it. We all know it," senior LDP lawmaker Taro Kono said recently at a Reuters Breakingviews event in Tokyo.
$1 = 117.6100 yen Editing by Manolo Serapio Jr.