Two ships - part of a fleet of 13 set to be dismantled at Able UK's Graythorp site - were due to arrive on Teesside within the next ten days.

But they could be stopped from entering English waters under European law after the Environment Agency said a licence it had granted was now invalid because planning requirements had not yet been met.

The Environmental Agency also ruled a modification of a waste management licence to enable Able UK to dismantle the ships at the dock is also invalid.

Controversy surrounds the ships because of concerns they carry asbestos, heavy oil and chemicals called PCBs linked to cancer.

The transfrontier shipment authorisation to allow the ships to come to Teesside was granted to the US Maritime Administration.

Able UK stressed this afternoon that it remains confident it will have the requirements needed to dismantle the ships in place by mid-November.

Craig McGarvey, agency area manager, said: "The agency's priority is to make sure that the environment is protected and that all the legal requirements are complied with.

"If, in the future, all the environmental and planning requirements are met, there is no reason why dismantling and recovery of ships should not take place at the Able site. Peter Stephenson, managing director of Able UK, in a statement today confirmed Environmental Agency representatives had revealed problems with the licences at a meeting last night.

"However, we do remain satisfied that we have relevant planning permissions in place for the recycling of the vessels and the creation of dry dock facilities.

"We have applied for approvals from the Department for the Environment, Food and Rural Affairs in relation to work on the dry dock facilities, covering matters such as dredging. Given that similar approvals have been given in the past, we are confident these will be in place by mid-November."

Friends of the Earth's executive director Tony Juniper said: "The Environment Agency must now make it clear that the ships must not be allowed to enter UK waters and must send them back to the United States.

"This is a real victory for the environment and for people on Teesside. We are delighted that the agency has realised it exists to protect the environment rather than help America get rid of its waste overseas."

The news came as Hartlepool Council's scrutiny co-ordinating committee was holding a day-long inquiry into the proposed dismantling of the ships.

Able UK, the Health and Safety Executive, the Environment Agency, English Nature, the Industry and Nature Conservation Association, Hartlepool Council, Tees Valley Regeneration and Friends of the earth were among organisations giving evidence at the meeting.

Mr Stephenson told the hearing the ghost ships contract was the largest ship recovery contract in the world and that Able UK always followed the best environmental options.

"We have independent consultants to verify the work we do. We are thoroughly audited before any contract is awarded," said Mr Stephenson.

He said the Able UK's facility was the only one approved by the US Government outside the US to do the work.

Mr Stephenson said Able UK complied with all known legal requirements.

The ghost ships contract was worth £17.8m and more than 98pc of the materials will be recycled.

Chris Gillies, from the Health and Safety Executive, told the hearing that there were about 1,300 tonnes of asbestos aboard the 13 ghost ships, which was about 1pc of the total amount of asbestos removed each year in the North-east.

He said the Health and Safety Executive would monitor Able UK's operation very closely.