Deputy Prime Minister Najib Razak said the decision was made because of the high cost of construction -- around 435 million dollars -- and not because of protests about the environmental and health impact of the project.

"We have studied (it). The construction of the Broga incinerator not only includes a capital expenditure of 1.5 billion ringgit but also high maintenance costs," he said.

Najib said the high cost of the incinerator would have led to higher taxes charged by the local town council for waste disposal.

David Quee, a committee member of the "Broga No Incinerator Action Committee", on Friday told AFP that the decision to scrap the project was announced by government lawyers in a letter to their counsel.

The incinerator project was to be built by a consortium comprising Japan's Ebara Corporation and local partner Hartasuma Sdn Bhd.

Broga, the site of the incinerator, is located south of the capital Kuala Lumpur. The project was designed to reduce Kuala Lumpur's dependence on landfill as a means of waste management.

Britain's Nottingham University has a campus in the area, which is surrounded by vegetable farms, palm oil and fruit plantations.

"Everybody is happy now. Our major concern was pollution and our health. It is also situated near a water catchment area," Quee said.