Electricity has returned to most of Spain and Portugal but with continued disruptions on the second day after an unknown failure caused a massive blackout across much of western Europe.

Electricity was restored to almost all of Spain and Portugal on Tuesday morning following a massive power cut affecting the entire Iberian Peninsula, but the cause of the blackouts remained a mystery.

The hunt has begun for the cause of a massive blackout across Spain, Portugal and parts of France that halted trains, bank machines and traffic lights, in one of Europe's biggest ever power system collapses.