"It shows it is okay to be going around the world, spilling your loads and trashing your environment and then you can get off as lightly as this," said Mr Roderick.

More than 72,000 tonnes of crude oil were spilt at the entrance to Milford Haven estuary after the tanker ran aground in February 1996, in the wake of a navigational error by an inexperienced port authority pilot.

Lord Bingham said in judgement that the Court of Appeal fully appreciated the trial judge's reasons for regarding the spillage as a very serious case calling for a substantial penalty.

But the judge had failed to give full credit to the authority's plea of guilty and had also failed to consider the possible impact of the �4m fine on the authority's ability to perform its public functions.

"We also conclude that he took much too rosy a view of the financial position and prospects of the authority," he said.

In all the circumstances, he concluded, the fine was "manifestly excessive".

Managing director of Milford Haven Port Authority Ted Sangster said: "We are very pleased that the judges gave serious consideration to the points we made and this is a much better result for us.

"The fine is one which we can now pay without threatening the long-term future of the business."

He said that the only way they could raise money to pay the fine was from customers and the original amount would have resulted in reduced investment.

"This would have threatened new jobs and could impact on some of our core business."

But the Environment Agency says it was "dismayed" by the court's decision.

"This is extremely bad news," said the agency's chairman Sir John Harman.

"This fine in no way compares to the very serious environmental impact that resulted from the Sea Empress incident. The environment has borne the ultimate loss."