But its opponents say the controversial dam will lead to the displacement of tens of thousands of poor tribespeople, the destruction of a unique ecosystem where the endangered tiger roams and drown ancient Hindu temples.

Since the project was announced three years ago, the dam on the Godavari river in Andhra Pradesh has created strong opposition.

"The displacement of up to 300,000 people, most of them tribals who have lived in the forests for generations, will be a human tragedy," said Biksham Gujja, senior policy adviser of WWF's global freshwater programme.

"It will also submerge much of Godavari valley, a unique ecosystem which is also a tiger habitat and threatens many species which we believe are endemic to that area."

The dam, Gujja said, also threatens one of the most important sacred Hindu towns, Bhadrachalam, where hundreds of thousands of pilgrims gather every year to worship at ancient temples dedicated to Lord Ram.

The state government-funded $3.5 billion Polavaram dam is one of several new dams being built by energy-hungry India that have pitted the needs of a booming economy against local inhabitants and the environment.

Authorities say the dam will provide enough water to irrigate 716,600 acres of land and drinking water to about two million people in 600 villages.

The dam is also touted by authorities as a solution to the annual flooding caused by the Godavari which regularly bursts its banks during the monsoon season.

Officials say adequate compensation, land, homes and even training and employment will be provided to the displaced.

"We are offering land for land, house for house and also grants for training in new fields such as manufacturing and marketing," said Ponnala Lakshmaiah, state irrigation minister.

But critics say the area is already one of the most heavily irrigated regions in the country and the cost of the massive project to the environment and the lives of locals is far higher than the benefits it will bring.

At least 1,340 species of plants, and hundreds of species of insects, snails and birds living in the valleys could also be wiped out by the creation of a 45,000 acre reservoir, said P Trinadh Rao, a local environmentalist.