The four ships are docked at Able UK's Hartlepool yard

Hartlepool Council's Planning Committee ruled on Wednesday that Able UK do not have permission to build a coffer dam and convert Graythorp basin into a dry dock.

Planning officers had been advised by legal experts that previous permission granted by the Teesside Development Corporation had expired.

The ruling was taken in private, because material used to make the judgement could become the subject of future legal battles between the council and the firm.

It now remains to be seen whether the company will reapply for planning permission.

Able UK has signed a multi-million pound contract to scrap a total of 13 ships.

Four rusting ships are docked at the firm's yard in Hartlepool while their future is decided in the courts.

Three Hartlepool residents, Neil Gregan, 25, Stephen Hall, 43, and Ben Marley, 18, challenged the company in the High Court on Monday.

After a day-long hearing, Mr Justice Sullivan said he proposed to allow their legal challenge.

He also ruled on 8 December that the licence modification issued by The Environment Agency allowing ships from the US to be broken up in Hartlepool "cannot stand".

The ruling means, subject to any appeal, the company will have to reapply for a licence and submit to an environmental assessment before work can begin.

The decision was a victory for Friends of the Earth (FoE) which is battling to stop the ships being dismantled.

Oils and oily ballast water could cause damage to the marine environment. Asbestos is a known carcinogen but is denser than water and non-soluble. PCBs have been called "probable carcinogens" and have been linked with neurological and developmental problems in humans. Mercury, lead, chromium and cadmium are highly toxic metals which accumulate in the body.