Ministers have been defending the government's announcement that it is "minded" to help fund a controversial dam project in Turkey.

The planned barrage has been widely criticised by environmentalists and opposition parties, and is also understood to have caused a split in the cabinet with Prime Minister Tony Blair over-ruling opposition to the project from the deputy prime minister, the foreign secretary, and the trade and industry secretary.

By flooding a wide area of south-east Turkey the Ilisu Dam would cause upheaval for the local Kurdish population, leaving tens of thousands homeless.

And by giving Turkey control of the flow the of the river Tigris, on which Iraq and Syria depend for fresh drinking water, the project could also destabilise the Middle East peace process.

In addition the dam, if built, could destroy what is widely accepted as a priceless archaeological wonder, the ancient city of Hasankeyf.

Trade and Industry Minister Dick Caborn insisted that careful environmental assessment had been carried out before the government announced it was "minded" to support the project through the export credit guarantee scheme.

He added that a dam was preferable to building nuclear power stations in a country like Turkey, which is prone to earthquakes.

The announcement followed construction firm Balfour Beatty's request for a government-approved export credit guarantee of up to £200m, to cover the UK company's role in the consortium building the dam.

Mr Caborn rejected widespread reports that the issue had caused a split between Mr Blair in favour of the dam, and Foreign Secretary Robin Cook, Deputy Prime Minister John Prescott, and Trade and Industry Secretary Stephen Byers against it.

Ethical foreign policy?

Opposition parties say the decision to back the project leaves the government's ethical foreign policy in tatters.

Liberal Democrat foreign affairs spokesman Menzies Campbell told the BBC: "We know that the World Bank refused to touch this project, we know that Robin Cook, John Prescott and Stephen Byers were apparently opposed to it and we know that not only is Syria opposed, so is the Arab League and Jordan and Iraq.

"I cannot understand why the government is persisting in this project in the light of this well-founded opposition."

Mr Campbell continued: "We are talking about the Middle East, where water is at a premium. [Former UN Secretary General] Boutros Boutros Ghali said in 1992 after the Gulf war that the next war in the Middle East would be fought over water, not politics."

Estimates suggest the Ilisu scheme would flood 15 Kurdish towns and 52 villages, leaving 16,000 people homeless and affecting the lives of a further 20,000.

Dam 'not needed'

Tony Juniper of Friends of the Earth said the dam was unnecessary, and there were other ways of solving Turkey's power shortage.

"The money could be invested, for example, in reducing the inefficiencies of Turkey's electricity grid," he said.

"There could be huge gains to Turkey's electricity economy, but without the impact of this dam."

The government has insisted that Britain carried out a full environmental assessment before joining a consortium, including Germany, Switzerland and the USA, backing the scheme.