* Sellafield tells non-essential staff to stay at home
* Britain says no danger to the public or workers
* State nuclear body says source of radiation unclear
By Kate Holton and Costas Pitas
LONDON, Jan 31 (Reuters) - Britain's Sellafield nuclear fuel reprocessing plant ordered all non-essential staff to stay at home on Friday while it investigated an elevated radiation reading onsite, which it later concluded was caused by naturally occurring radon gas.
Sellafield, the site of Britain's worst nuclear accident in 1957 and once the producer of plutonium for nuclear bombs, said its investigation had shown there was nothing wrong with any of its operations.
Radon is a naturally occurring radioactive gas that comes from rocks and soil.
"The number one priority for us is, at all times, safe secure stewardship of the Sellafield site, which is the most complex and challenging nuclear site in Europe," it said.
The facility, just outside Britain's striking Lake District national park on the coast of the Irish sea in northwest England, had continued to operate normally during the morning and both the operator and the government had said there was no risk to the public.
A higher than normal radiation reading was logged overnight via an air monitor at a perimeter fence.
"Standard weekend working operations will continue, with day staff due back in on Monday as normal," it added.
Sellafield, a patchwork of grey buildings, industrial cylinders and cooling towers surrounded by grassland about 300 miles (480 km) northwest of London, said the decision to keep staff at home was conservative.
Once the source of plutonium for Britain's nuclear bombs, Sellafield was the site of the October 1957 Windscale fire, Britain's worst nuclear accident, when a plutonium reactor burned for five days, belching radiation into the atmosphere.
It is the site of a civilian nuclear power station that is being decommissioned by a consortium of British company Amec , French group Areva, and U.S. firm URS .
Now one of two nuclear fuel reprocessing plants in Europe along with Areva's La Hague plant in France, Sellafield receives spent fuel from power plants across the world, including Japan. It employs over 10,000 people.
Nuclear experts and academics had said initial information available to the public indicated this was a minor incident that had little in common with the 2011 Fukushima and 1986 Chernobyl disasters.
"This is a prudent precaution until the cause is known and the situation rectified," said Richard Wakeford, a professor of epidemiology at the University of Manchester, of the initial decision to withdraw non-essential staff.
"It's a different situation here than it was at Fukushima and Chernobyl because you haven't got operating reactors."
But the increased radiation reading, even from radon, could increase scrutiny of Sellafield's safety record.
Environmental group Greenpeace says Sellafield has the highest concentration of radioactivity on the planet and that its reprocessing plants discharge some 8 million litres of nuclear waste into the sea each day.
It also contains what its deputy managing director George Beveridge described in 2009 as "the most hazardous industrial building in western Europe", housing a 150-metre-long (490 feet) pond used to store spent nuclear fuel.
In April 2005, leaked radioactive waste was discovered from Sellafield's THORP reprocessing plant which may have started as early as August 2004. It was categorised as a level 3 event on the International Nuclear Event Scale and resulted in fines.
British Prime Minister David Cameron has thrown his weight behind building new nuclear power stations as a way to replace ageing coal and nuclear power plants.
The government last year signed a $26 billion deal to build a new nuclear plant in southwest England with the support of France's EDF and two Chinese partners.
NuGen, a nuclear new build joint venture between Japan's Toshiba and France's GDF Suez, owns a site adjacent to the Sellafield reprocessing plant to build a new nuclear power station. The group wants to build three reactors on the site, the first scheduled for service in 2024.