A Brazilian judge threw out a ruling that could have delayed the building of a huge Amazon dam opposed by environmentalists, Indians and Avatar director James Cameron.

The judge in the capital Brasilia reversed a decision to suspend contract bidding scheduled for next week and also overturned the suspension of the environmental licence for the 11,000-megawatt Belo Monte dam, Brazil's solicitor general said.

Federal prosecutor Renato Brill de Goes, acting on behalf of dam opponents, said an appeal would be filed. He also questioned why the dam was put back on track so quickly, just a day after the suspensions were appealed against by Brazil's government.

Cameron said government pressure played a role in the quick court reversal.

"When you have entrenched interests and billions of dollars, that's a big steamroller," he said from Washington after spending a week in Brazil protesting at the dam and meeting Indians who would be affected.

Brazil's electricity regulator Aneel resumed plans to hold an auction on Tuesday to pick a consortium to build and operate the £7 billion dam and sell electricity to the nation.

The original decision halting the dam from going forward came on Wednesday, when Cameron was visiting a small city near the dam site accompanied by members of Amazon Watch, a San Francisco-based group that works to protect the rainforest and the indigenous people living there.

In a statement, Amazon Watch said "the battle is not over".

"We are committed to supporting Brazilian indigenous peoples who have vowed to fight to stop the Belo Monte dam.

"This dam is one of the most destructive projects ever undertaken in the Amazon."

Belo Monte would be the world's third-largest hydroelectric energy producer, behind China's Three Gorges dam and the Itaipu dam that straddles the border of Brazil and Paraguay.

Environmentalists and indigenous groups say Belo Monte would devastate wildlife and the livelihoods of 40,000 people who live in the area to be flooded. They also argue that the energy generated by the dam will largely go to big mining operations, instead of benefiting most Brazilians.

Brazilian President Luiz Inacio Lula da Silva has repeatedly insisted that the dam is essential, and says it will provide clean and renewable energy to feed increasing demand.