He also urged that “all necessary steps” now be taken to resolve the controversy in a way which was “lawful and seen to be environmentally acceptable”.

The judge described how environmentalists and residents at Hartlepool on Teesside fear that toxic chemicals on board the ships could threaten the area.

He was giving his reasons for allowing a legal challenge by three residents ­ Neil Gregan, 25, Stephen Hall, 43, and Ben Marley, 18. all from Hartlepool ­who argued that there was no valid planning permission allowing the ships to be dismantled on Teesside.

Last week the judge also ruled that an Environment Agency decision to allow the modification of a waste management licence so that the work could go ahead was also unlawful and could not stand.

Able UK Ltd, the company which has the multi-million pound contract for the ships, was refused permission to appeal but can still ask the Court of Appeal to hear the case.

If it is unsuccessful the company will face having to make fresh applications both for planning permission and a new licence.

The four ships are part of a fleet of 13, with the other nine still in the United States awaiting permission to sail.

Environmentalist group Friends of the Earth says the US authorities want to send up to 150 old ships to Britain to be dismantled.

In his ruling, the judge said Able strongly disputed the “toxic ghost ship” claims and said the condition of the vessels was no different from that of other ships currently sailing the high seas.

The company also contended that its proposals for dismantling the ships were both lawful and environmentally acceptable.

The judge said the company appeared to have given certain assurances to the US maritime administration (MARAD) “as to the existence and availability of the necessary permissions and licences”.

But the company did not apply for a fresh planning permission. Instead it relied on an assurance from Hartlepool Borough Council, the local planning authority, that an existing permission originally granted in 1997 and extended in 2002, covered the breaking up of ships.

The council’s decision was fatally flawed because the existing permission only covered “redundant marine structures”, such as those used in the North Sea oil industry, and not ships, said the judge.

The company also did not apply to the Environment Agency for a new waste management licence, but applied for the conditions on its existing licence to be modified.

Had an application been made for planning permission and for a waste management licence to authorise the proposed dismantling of the ships, it would have been possible for the council or the Environment Agency to give proper consideration as to whether an environmental impact assessment, or an appropriate assessment under other relevant regulations, should be carried out.

The judge said: “As matters stand an environmental dispute between local residents, Friends of the Earth (FoE) and Able has not been resolved by the responsible regulatory authorities ­ and yet the ships remain moored in the basin.

“The present position is highly unsatisfactory from the point of view of the council, Agency, local residents and groups such as FoE, and indeed Able itself.

“I conclude by expressing the hope that the regulatory agencies, including the council and the Environment Agency, will urgently conduct a thorough investigation into the decision making processes that have conspicuously failed to stop this most unsatisfactory situation from arising ­ and, more important, take the necessary steps to decide what they now propose to do in order that the fate of these ships may be determined in a manner that is both lawful and seen to be environmentally acceptable.”