But Peter Stephenson, the managing director of Able UK, said the ruling was a "clear judgement of the failings" of the Environment Agency.

The ruling means Able UK will have to reapply for a licence and submit to an environmental assessment before work can begin on breaking up the ships.

Mr Stephenson, speaking after the hearing, said he hoped the Environment Agency would now come forward with proposals for a way forward.

The waste management licence modification was granted to Able by the Agency, but at the High Court in London the agency agreed with FoE that its decision was fatally flawed.

Mr Justice Sullivan said: "This defendant (the Environment Agency) is correct to concede its decision cannot stand."

He said he hoped to give his full reasons for his decision on Thursday, but he made it clear that the ships were almost certain to remain in the UK over the winter.

Four ships have currently made the transatlantic trip to Teesside from the James river in Virginia.

Able UK wants to decommission a total of 13 vessels.

We applied in all good faith for the modification of the licence and received the agreement of the Agency before the vessels left the United States

The judge said it was clear that Able's plans to dismantle the ships was a project covered by the European Habitats Directive and could potentially affect areas near the company's premises which were environmentally sensitive.

FoE had argued the ships, which were up to 50 years old, contained significant amounts of hazardous substances, such as asbestos and PCBs, and called for "the most rigorous environmental impact assessments".

But the Environment Agency had made the licence modification allowing in the US ships on the basis that they would not have a significant effect on the surrounding area.

The judge said he would put a stay on quashing the licence modification until he had heard a further legal challenge next week being brought by three local residents opposed to planning permission being given to Able's plans.

Friends of the Earth called the decision a "victory for the environment".

Executive director Tony Juniper said the battle would continue to try to prevent nine other ships in the so-called "ghost fleet" being sent across from the US - where they have been prevented from leaving by an injunction lodged by environmentalists in an American court.

Safe storage

A spokesman for the Environment Agency said: "The Environment Agency accepts Mr Justice Sullivan's decision that it was right to declare the modification issued on 30 September to Able UK's waste management licence invalid.

"We will now await the outcome of the judicial review next week on the planning issue.

"In the meantime we will continue to ensure that the ships are stored safely until the situation is resolved."

Mr Stephenson said: "It is important to underline that today's [Monday] hearing related directly to the actions of the Environment Agency in dealing with our application for the modification of our waste management licence.

"We applied in all good faith for the modification of the licence and received the agreement of the Agency before the vessels left the United States.

"It was only when the ships were well on their way to the UK that the Agency informed us that they believed that there were problems with the way in which they had handled the application."