The Waikato was sunk off New Zealand

Critical negotiations cannot even begin until Mr Meacher gives his ruling - and he will not return from holiday until mid-September.

Project manager Nick Murns said: "It's extremely frustrating.

"We submitted our application in September last year."

Officials took months working through logistical problems thrown up by the proposal, the first of its kind in Europe.

It was finally presented to Mr Meacher seven weeks ago, according to Mr Murns.

Safety worries

He said: "The officials just apologise profusely about it, but there's nothing they can do.

The Waikato has been made safe for divers

"We need to lease the sea bed from Crown Estates, but they have never done this before and they are worried about liability.

"They are not prepared to do any work on it until there has been a decision."

Arrangements to pay for the ship - with a tender of between �40,000 and �80,000 - could break down.

Scylla has currently been withdrawn from sale, for unknown reasons.

Her present scrap value may not cover the cost of breaking her up.

New Zealand wreck

The reef campaigners plan to spend six months making the ship safe for the environment, shipping and fishing.

Communities in Whitsand Bay could benefit

Mr Murns recently returned from a trip to dive on a former New Zealand navy vessel, Waikato - built by Harland & Wolf in Belfast.

The ship was donated by the New Zealand government.

Mr Murns says communities near the wreck site are prospering as divers travel to the area.

He said: "This could bring precious tourist income to the South West.

"If we don't get the ship, she'll probably be towed to India and drawn up on a beach, and thousands of people will pull off what they can to make a few rupees.

"Where's the benefit in that?"