The nation's largest electricity generating company had applied to Her Majesty's Inspectorate of Pollution for authorisation to burn orimulsion without installing equipment for removing sulphur dioxide - the air pollutant chiefly responsible for acid rain.
The inspectorate had told National Power it was unlikely to grant the authorisation without an undertaking to fit this equipment. The company responded by asking for time to reconsider its application, and now it has asked for an indefinite delay. Meanwhile, it is applying for permission to burn heavy fuel oil at Pembroke, West Wales.
Karen McVeigh, of Friends of the Earth, said: 'It's a victory for public pressure and the environmental groups. The plan to burn orimulsion has caused such a furore that they had to withdraw.'
There were fears that the acid fall-out from the pollution would cause severe acid damage to rivers, wildlife and plants in uplands down-wind of the plant.
But National Power yesterday denied it had dropped its plans and said it simply needed more time to consider its options for using orimulsion. The fuel is a mixture of heavy oil and water produced in Venezuela. The generators want to import it as a cheap alternative to coal.
If Pembroke were to burn 4 million tons a year it would produce more sulphur dioxide than any other plant in Britain with the exception of the giant coal-burning Drax power station.
Orimulsion also contains the toxic metals vanadium and nickel, and leaves an ash which has to be treated as a hazardous waste. Environmentalists have dubbed it 'the world's filthiest fuel'.
National Power also wants to burn smaller quantities at its Padiham station in Lancashire. Its application there has also been indefinitely delayed.
Orimulsion is already being burnt by PowerGen, the company's chief rival, at its Ince and Richborough power stations in Cheshire and Kent.