Environmentalists and residents of Hartlepool, northeast England, want the project stopped because the vessels contain toxins including asbestos, PCBs and more than 500,000 gallons of oil.

In his ruling, High Court Justice Sullivan said the license modification that would have allowed the ships to be broken up in the UK "cannot stand."

The UK Environment Agency granted the waste management license modification to Able UK, but at the High Court in London the agency agreed with Friends of the Earth that its decision was fatally flawed.

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

Friends of the Earth said earlier that if it was successful, Able UK would have to apply for a new license -- which would involve a full environmental assessment -- if the company wanted to dispose of the ships.

David Wolfe, appearing for the environmental group, said there were now four U.S. Navy ships at Hartlepool covered by an injunction that no work be carried out until the legal position has been clarified.

However, they were only four of 13 under the present contract between Able and the U.S. authorities, he said -- "and those 13 are only a fraction of the 150 or so U.S. Navy ships which the U.S. wants urgently to dispose of, and are waiting for disposal in rivers in the U.S."

The planned disposal of the ships in Britain has caused uproar on both sides of the Atlantic with U.S. and UK environmental groups challenging the scheme in respective courts.

British politicians have also entered the fracas, calling for the ships to be repatriated and the waste to be disposed of in the United States.

The rusting ships have been languishing at their anchorage points on the James River in Virginia for years as U.S. authorities argued over how best to dispose of them.