Thousands of new offshore wind turbines could power every home in Britain by 2020, the government announced today, as it set out new wind-energy plans.

John Hutton, the business secretary, proposed the creation of up to 33 gigawatts of offshore wind energy at a European energy industry conference in Berlin.

He called for companies to invest in large-scale farm development to generate enough power for up to 25m homes in the next 12 years.

That would require around 7,000 turbines, or one every half-mile, Hutton told the BBC's Politics Show yesterday.

He admitted that "tough choices" would have to be made if the UK wanted to respond to climate change and become more self-sufficient.

"It is going to change our coastline, yes, for sure," he said.

"There is no way of making the shift to a low-carbon technology without there being change and for that change to be visible and evident to people.

"We've got a choice as a country about, you know, whether we rise to this challenge of change or whether we stick our head in the sand and hope it's going to go away."

The expansion will be subject to a strategic environmental assessment, which Hutton also launched today.

Currently just 2% of Britain's power comes from renewable energy sources, and wind provides less than half a gigawatt.

Hutton's proposals got cautious backing from opposition parties.

"We're an island nation - there's a lot of wind around," the shadow business secretary, Alan Duncan, told the Politics Show.

"We should use that offshore capacity for generating electricity that's clean and secure."

The Liberal Democrats' environment spokesman, Chris Huhne, welcomed a "change in tone" from the government.

But the Lib Dem leadership candidate warned: "Ministers need to pay households to install microgenerators and also invest in big schemes like the Severn Barrage which alone could generate 5% of our electricity needs."

Michael Rea, the chief executive of the Carbon Trust, also said that "cost reduction is now the name of the game".

"Offshore wind [energy generation] is set for huge growth but this will require substantial investment before it can be realised at this scale," said Rea.

John Sauven, the executive director of Greenpeace, said that the plans amounted to a "wind energy revolution" but said premium prices had to be guaranteed for clean electricity.

He also called for Labour to "drop its obsession with nuclear power".

"Hutton is proposing nothing less than a wind energy revolution, but it won't become a reality on the back of a speech," he said.

"If we are finally to exploit the massive energy resources we have available to us on this windy island, there will now need to be a revolution in thinking in Whitehall, where the energy dinosaurs have prevailed for too long."

"We need the government to guarantee premium prices for clean electricity so industry can take risks to get tens of thousands of turbines built and installed out at sea.

"And Labour needs to drop its obsession with nuclear power, which could only ever reduce emissions by about 4% at some time in the distant future."

He said Britain needed to slash its electricity emissions by 2020, "and wind power, not nuclear, should get the money and support".

"That's the test, and we wait to see what government does next," he added.

Friends of the Earth's renewable energy campaigner, Nick Rau, said: "We are delighted the government is getting serious about the potential for offshore wind, which could generate 25% of the UK's electricity by 2020.

"There is a lot more renewable energy out there – from big wave and tidal power projects to roof-mounted solar PV panels. If we make the most of these abundant resources we could generate almost half of our electricity from renewable sources by 2020.

"The government must now set out what support mechanisms it will put in place to deliver on its proposals and make the most of other renewables. It must also increase investment in the development of new renewable technology, including bigger and more efficient wind turbines."

"We should also be cooperating with our European neighbours to make the most of our shared resources, for example by developing a European super-grid or large scale wind farms in the North sea."

But the vice president of the Royal Academy of Engineering, Dr Sue Ion, said that wind power could only provide about 20% of the country's electricity to preserve grid stability.

"Laudable though the targets are, we urge government to think about the practicalities of deploying these technologies; the engineering effort to build 7,000 large offshore turbines by 2020 would be enormous, unprecedented and is probably underestimated," she said.

Ion said that the academy would be starting a new study on the engineering challenges of offshore wind projects, which would report next year.