Carbide-based fuel assembly includes outer structural member of ceramic matrix composite material, the interior surface of which is lined in higher temperature regions with an insulation layer of porous refractory ceramic material. A continuous insulation layer extends the length of the fuel assembly or separate insulation layer sections have a thickness increasing step-wise along the length of the fuel assembly from upper (inlet) section towards bottom (outlet) section. A fuel element positioned inward of the insulation layer and between support meshes has a fuel composition including HALEU and has the form of a plurality of individual elongated fuel bodies or one or more fuel monolith bodies containing coolant flow channels. Fuel assemblies are distributively arranged in a moderator block, with upper end of the outer structural member attached to an inlet for propellant and lower end of the outer structural member operatively interfaced with a nozzle forming a NTP reactor.