Rauscher had come under fire for the company's opaque communication policy after two recent incidents at nuclear power stations in Kruemmel and in Brunsbuettel, both in northern Germany.

German officials have accused Vattenfall of failing to report the full extent of a fire at the Kruemmel plant and neglecting for days to inform authorities of operators experienced at nearby Brunsbuettel.

"Klaus Rauscher explained that it cannot be denied that the event of the past few weeks have tarnished the image of Vattenfall Europe," the statement said.

"Errors have been made for which he, as head of Vattenfall Europe, must bear responsibility. The company must now regain the trust which has been lost, in particular with regard to its customers, shareholders, and staff, and it must do so quickly."

It said that Rauscher was stepping down because he did not want to "get in the way of a new start."

The head of Vattenfall Europe's nuclear division, Bruno Thomauske, and communiciations chief Johannes Altmeppen have already left their posts in the wake of the scandal.

Vattenfall initially said the fire at the Kruemmel plant had been isolated from the atomic reactor, but according to officials in the northern state of Schleswig-Holstein, the flames had reached the building housing the reactor.

The fire broke out just two hours after operators were forced to temporarily shut down the Brunsbuettel plant because its capacity had overloaded.

Regional authorities claim that they were only told on July 6 that the water purification system at the nuclear reactor cooler at Brunsbuettel cut out twice as technicians tried to restart the reactor.

Vattenfall has strongly denied that it sought to cover up the extent of the problems, but the incidents have caused an outcry in a country that is deeply divided over whether it should be using nuclear energy at all.

Germany has begun a long-term phase-out of its nuclear energy programme and expects to mothball the last of its 17 plants around 2020.

Chancellor Angela Merkel told reporters in Berlin that she could understand the public's concerns and its criticism of the nuclear industry, despite calls from conservatives to maintain nuclear power in Germany.

"My pity for the industry is limited. After all, dramatic errors were committed," she said.

But Merkel cautioned not to stigmatise the entire sector.

"I wouldn't generalise," she said, while adding: "It must not happen again."

The chief executive of the parent company, Vattenfall, Lars Josefsson, was named in December as Merkel's advisor on climate change.

Josefsson travelled to Berlin to tell reporters that Rauscher's departure would allow the company to win back trust.

"A new beginning is easier with new people," he said.

Vattenfall earned half its turnover of 16 billion euros (22 billion dollars) last year in Germany.

But Environment Minister Sigmar Gabriel of the Social Democrats, opponents of nuclear power, said Vattenfall needed more than a reshuffle at the top.

"A complete investigation and above all a change in the approach to security are needed," he said in a statement.

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