Environmental and community groups have taken Kenya's government to court over a controversial project to grow sugar in the River Tana Delta.
The $369m project aims to grow sugarcane to produce ethanol and generate power.
The project was approved last month, despite concern of possible negative impact on the fragile coastal wetlands.
But last week, a judge ordered work on the project to be halted while the case was being heard.
The lawsuit claims that at least five laws and the Kenyan constitution would be broken if the project goes ahead.
The court action is backed by Kenyan Nobel Laureate and environmentalist Wangari Maathai, who warned that the country would regret failing to protect its environment.
"We cannot just start messing around with the wetland because we need biofuel and sugar," Ms Maathai told the AFP news agency.
The area, about 190 km (120 miles) north of the port city of Mombasa, is home to 350 species of birds, including the globally threatened Basra reed warbler and Tana River cisticola, according to the UK's Royal Society for the Protection of Birds (RSPB).
It also hosts lions, hippos, elephants, rare sharks and reptiles including the Tana writhing skink, as well as endangered primate species.
Nature Kenya says the project would have serious effects on the 20,000 hectare site.
"We want the project stopped because it's likely to make the region an ecological disaster," Enoch Kanyanya, the organisation's conservation manager told the BBC.
Sugarcane needs considerable irrigation and its cultivation would cause substantial drainage of the wetland, conservationists say.
Although the project's backers say the project will boost the area's economic growth and provide thousands of jobs, environmental groups say it is not economically viable and its growth potential has been massively overestimated.
A report commissioned by Nature Kenya and the RSPB showed the project's costing had ignored the costs of water, land and the loss of community livelihoods.
The Tana River Delta is a popular tourist attraction and environmentalists argue that the project would also lead to the loss of earnings from tourism, and want the wetlands to be declared a protected area.
The global race to produce biofuels has been blamed for rising food prices and shortages by diverting resources from the cultivation of food crops.
UK aid agency Oxfam says the push for biofuels has dragged more than 30m people worldwide into poverty.