The agency feared the homes would be at risk from flooding

Its officials feared that dozens of new homes would be at risk from flooding if they were built on land near Welshpool.

Based on their advice, Powys Council turned down the development in 2005, but the developer has won an appeal.

The inquiry ordered that the agency pay all the costs in the case, which one estimate puts at at least �100,000.

The development at Sarn Meadow, Guilsfield, near Welshpool, was refused planning permission by Powys Council in June 2005, based on advice from the Environment Agency.

But when the public inquiry started on 1 May the council altered its stance and said it would not oppose the project.

As far as the Environment Agency was concerned it was a matter of principle Trevor Trevor

However, the agency continued to object to the homes being built on the land owned by farmer, Trevor Trevor.

Finally, the Welsh assembly's planning inspector, who carried out the public inquiry, found in favour of the development and ordered the agency to pay its own costs along with Powys Council's and the developer's.

One estimate put the developer's costs alone at about �100,000, but the Environment Agency would not comment on the figure.

"I feel the Environment Agency has not come out of this with any credit at all," said Mr Trevor, who added that part of the development impinged on a flood plain.

'Flood defence'

"All flooding issues were dealt with, but the Environment Agency refused to discuss that engineering works could overcome any flooding issues.

"As far as the Environment Agency was concerned it was a matter of principle."

Mr Trevor added that the planning inspector felt the homes would not be at risk from flooding.

The agency said it had only just received the "decision notice from the planning inspector" and it was reviewing it.

A spokesman added: "Our role is to secure and where necessary restore the effectiveness of flood plains for flood defence and environmental purposes.

"We do this by providing expert advice to local authorities and for developers about the risks of flooding to people and property."

Former AM Glyn Davies said the agency had made a "serious misjudgement", which would result in the taxpayer "picking up a bill for more than �100,000".