An Australian court Wednesday revoked approval for an Indian-backed project to build what could be one of the world's biggest coal mines, which environmentalists say threatens the World Heritage-listed Great Barrier Reef.

But while environment groups hailed the decision as another important step in the Aus$16.5 billion (US$12.2 billion) project's eventual demise, Indian firm Adani insisted it would go ahead.

"With the consent of the parties, the Federal Court has formally set aside the approval of the Carmichael Coal Mine and Rail Project," Australia's Environment Department said in a statement.

Environmental groups had challenged the government's approval of the mine on the basis of the amount of greenhouse gases it would create, its impact on vulnerable species and Adani's "poor environmental record".

They also have protested against its impact on the Great Barrier Reef, one of the world's most biodiverse marine areas, because the coal would have to be shipped out of a nearby port.

The court did not publish its reasons for revoking the approval, but the Environment Department said the decision was made because there was a possibility the advice it had provided to Environment Minister Greg Hunt before he made his decision did not meet all technical requirements.

"This is a technical, administrative matter and to remove this doubt, the department has advised that the decision should be reconsidered," it said, adding: "Reconsidering the decision does not require revisiting the entire approval process."

Sue Higginson, a lawyer for the Mackay Conservation Group which brought the legal challenge, said the court ruled on whether due consideration had been given to advice about two vulnerable reptiles -- the lizard-like yakka skink and the ornamental snake.

Both are only found in Queensland, the state where the project would be located.

"The case also alleged that the minister failed to consider global greenhouse emissions from the burning of the coal, and Adani's environmental history, however these matters are left unresolved before the court," Higginson said.

The Environment Department said it expected it would take six to eight weeks to prepare new advice and supporting documentation and for Hunt to reconsider his decision.

- Electricity and jobs -

It is the latest set-back for the controversial Adani mine and comes after major European and US banks ruled out funding parts of the development over environmental concerns.

Critics say falling coal prices have also dampened interest.

The mine was forecast to produce 60 million tonnes of thermal coal a year for export, providing electricity for up to 100 million people in India, and generate thousands of Australian jobs.

The Queensland Resources Council said foreign investors were watching closely.

"Foreign investors do not have limitless patience as their projects are mired in a seemingly unending process of legal challenges," council chief executive Michael Roche said.

The development proposes massive open-cut and underground coal mining some 160 kilometres (100 miles) northwest of Clermont in central Queensland, as well as a 189-kilometre rail link.

Greenpeace said the government now had a "second chance" to consign the mine to history while Ellen Roberts, from the Mackay Conservation Group, said the decision paved the way for the government to overturn approval.

"It's obviously got a huge climate change impact, huge ground water impact. There are a number of threatened species... there are impacts on the Great Barrier Reef," Roberts told AFP.

Adani said the decision was regrettable, but it was committed to ensuring its mine, rail and port projects in Queensland were developed and operated in accordance with Australian laws, including strict environmental conditions.

"We have been advised that, because certain documents were not presented by the department in finalising the approval, it created a technical legal vulnerability that is better to address now," it said.

Adani, which is in the fifth year of development and approvals for the massive project, said it was confident the conditions imposed on the original consent were robust and appropriate.

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Adani