The Welsh Government has told the Environment Agency that it mustn't give permission to a controversial water cooling system at the new Pembroke Power Station until a review into its impact on a fragile and highly protected marine wildlife site has been completed.

In a letter to the Environment Agency, the Government has criticised the report that was expected to give the damaging plant the go-ahead, saying there were "gaps in the analysis and logic to support the conclusions reached".

Friends of the Earth Cymru, who in June 2010 submitted a complaint to the European Commission over the handling of the case, welcomes the move, but says that the Welsh Environment Minister must now intervene and call in the decision.

The Countryside Council for Wales, the Welsh Government's environmental advisor, also has serious disagreements with the Environment Agency's conclusions, and believes the cooling system should not be allowed.

Laura Gyte, Friends of the Earth lawyer, said: "The Welsh Government is right to have major concerns about the impact this new power station will have on one of Europe's most important wildlife sites.

"We believe the Environment Agency's assessment of the impact this power station will have on this fragile habitat is inadequate and unlawful.

"The Welsh Environment Minister must call-in this decision to ensure this coastline is given the legal protection it requires."

Gordon James, director of Friends of the Earth Cymru, said: "This case is now costing public money, and causing more uncertainty over jobs in an area that desperately needs them.

"We have argued from the outset that waste heat from power stations using the imported Liquified Natural Gas should be used productively, as it is at the new gas-fired power station in Kent. But in Pembrokeshire the intention is to dump this heat - which is equivalent to 40 per cent of Wales' electricity demand - into the Milford Haven waterway.

"We should not be throwing away this vast amount of energy, and we should not be damaging this important and precious wildlife site unnecessarily. Industry can only exist alongside Pembrokeshire's magnificent environment if we use the best technology and follow the highest standards."