Environment Minister Michael Meacher has ruled out intervening to stop councils signing a £1 billion waste contract.

He said he could not stop Brighton and Hove City Council and East Sussex County Council agreeing to the £1 billion private finance initiative deal.

The two authorities are due to agree on Wednesday whether to award the 25-year waste disposal contract to contractor Onyx Aurora.

Replying to Lewes MP Norman Baker, the environment minister said it was up to the councils to decide the nature and timing of contracts.

But he said the deal should be flexible enough to respond to the results of a public inquiry into the two councils' waste plans, which are not expected until mid-2004.

Mr Baker said: "I believe the county and Brighton and Hove are acting unwisely and improperly and I draw to their attention the minister's reply.

"He would expect the contract to be able to take account of changed circumstances, including the result of the public inquiry."

Contractor Onyx Aurora wants to operate an incinerator at North Quay, Newhaven, and an anaerobic digestion plant at Pebsham, Bexhill.

The company may apply for planning permission for smaller facilities, which include a large composting works at Golden Cross, near Hailsham, and four recycling centres at Brighton, Newhaven, Maresfield and Bexhill, before the inquiry results are known.

Only two of the sites, North Quay and the Brighton recycling centre, are identified in the plans being examined at the inquiry.

Mr Meacher said the plans were well advanced and could be taken into account by planners if applications had to be considered before the inquiry reports.

East Sussex County Council said between 33 per cent and 35 per cent of household rubbish would be recycled and the plan was the best practicable environmental option of eight alternatives studied.

Council leader Peter Jones said the two authorities could lose £49 million of Government cash if they did not sign the contract this month.

He said the contractor knew it would be difficult to build at sites which were not approved at the inquiry.

The councils are still waiting to hear if they have won Government cash help.

The contract will be signed before the end of the month if councillors agree the deal on Wednesday. The four-month public inquiry starts in May.