THE plan to break-up obsolete US warships in a North-East yard hit further problems last night as company bosses battled to keep the deal on course.

Environmentalists have already condemned the $17m deal that will see 13 rusting ships from the James River Reserve Fleet, in Virginia, brought to Hartlepool for disposal.

Last night, they were joined by Durham County Council which claimed the plan posed "a serious environmental threat" to the success of a £10m programme to clean-up the North-East coast.

Greens are also urging Hartlepool Borough Council to order an environmental impact assessment.

They fear the ships, which contain asbestos, mercury, lead and carcinogenic poly-chlorinated biphenyls (PCBs), pose a serious threat to nearby mudflats.

And, with a legal battle already brewing in America, bosses at Able UK, the company that won the contract, are now facing a race against time to prepare the ships for their 4,000-mile journey.

Under the contract signed with the US Maritime Administration the ships - dubbed the "ghost fleet" - must be removed by November 30. Otherwise, the US authorities will be able to claim damages of $1,350 per vessel per day.

Able UK insisted last night that the project was on time and environmentally sound.

But Durham County Councillor Bob Pendlebury, who is chairman of the County Durham Environmental Partnership, said: "It is staggering that anyone has even considered allowing them into the country.

"We have just spent £10m on Turning the Tide, a massive project to clean up the Durham coastline which has won major international awards.

"When people hear that, almost in the very next breath, this potentially toxic armada is going to be allowed here and moored just next door while it is broken up and scrapped, they will think we're mad."

He added: "People will say it's a question of 'jobs versus the environment', but that sort of argument should have disappeared along with the last of our coal mines."

Hartlepool council yesterday asked Able UK for more time to decide whether an environmental impact assessment was needed before it considers the planning application.

Friends of the Earth campaign director Mike Childs said: "The region could be a centre of excellence for renewable energy but instead it is going to be scene as a dumping ground for toxic waste."

English Nature has warned Hartlepool council that the construction of the dry dock dam needed for the ships is likely to have significant effects on the environment.

It is concerned about the impact the project could have on birds who feed on the mudflats near the Graythorp dock.

The managing director of Able UK, Peter Stephenson, described Coun Pendlebury's comments as "statements which have no basis of fact and which seem deliberately designed to cause totally unjustified alarm".

He said: "To use phrases such as 'toxic armada' and 'deadly flotilla' may gain a few headlines but again they are a total distortion of reality.

"The truth of the matter is that dismantling these vessels in what is one of the best facilities in the world is far preferable to the fate of very many other ships which end their days being sent to the bottom of the ocean.

"Or there is the risk of appalling pollution problems in a third world country where they are literally ripped apart with no proper health or safety controls."