Local residents objected to the plans

They are quoted as saying the decision was influenced by fears that the construction work on the slopes of the Parthenon - the proposed site for the new museum - could damage nearby antiquities.

Correspondents say such a ruling is a serious setback for the Greek Government's efforts for the return of the Parthenon frieze known in Britain as the Elgin Marbles, which once adorned the Parthenon temple on the Acropolis, from the British Museum in London.

Greece had hoped a new modern Acropolis museum would put pressure on Britain to return the sculptures for display during the 2004 Olympics in Athens.

The 2,500-year-old sculptures depicting religious and mythological scenes have been held at the British Museum since 1816.

Delay

The ruling may affect Greece's campaign to return the marbles

The Council of State's decision has not yet been published, although it is common practice in Greece to release information about rulings to reporters first.

But the court appears to have sided with local residents and cultural associations which said the construction study did not address risks to buried antiquities.

The 90m-euro museum - a glass building designed by New York-based architect Bernard Tschumi - is behind schedule.

However, the Greek Government had pledged to have a purpose-built hall for the marbles ready for the Olympics.