BRASILIA: Environmentalists, indigenous groups and British rock star Sting have denounced a government plan to build the world's third largest hydroelectric dam in the Amazon river basin, which they claim will devastate the region.

The government of President Luiz Inacio Lula da Silva on Monday approved the 11 billion dollar Belo Monte project on the Xingu river that will flood 500 square kilometers (193 square miles) and supply 11 percent of Brazil's electricity.

Detractors say the dam in northern Para state will trigger droughts along a 100 kilometer (60 mile) stretch of the Xingu, displace thousands of indigenous people, attract an army of job-seekers, and accelerate the deforestation and destruction of the rain forest.

Environment Minister Carlos Minc told reporters Monday that the dam project has been issued "the most demanding environmental license in history," including 800 million dollars to mitigate environmental damage and protect indigenous areas.

The project's construction contract will go up bidding in April.

If completed, Belo Monte would become Brazil's second-largest hydroelectric dam behind Itaipu and the world's third largest behind China's Three Gorges dam.

"This project only benefits companies... it will generate methane gas that will change the climate and displace 30,000 people," Xingu Vivo Movement's Antonia Melo told AFP. The movement encompasses 150 indigenous and social groups in Brazil.

Xingu Roman Catholic Bishop Erwin Krautler, the project's strongest opponent, said the dam would be extremely harmful to both the delicate Amazon environment and the people it harbors.

"The project completely underestimates the consequences which will be irreversible. Lula promised to consult the (local) population, but there never was any talk," he told reporters.

Para state Attorney General Ubiratan Gazetta told AFP the project will need massive digging work similar to the Panama Canal that will bring in 85,000 workers and double the current population in the region.

When it was still on the drawing board last year, the Belo Monte project was denounce by Sting during a concert in Sao Paulo.

The singer-composer invited Brazil's legendary indigenous leader Raoni on the stage to join in criticizing the hydroelectric plan.

Energy expert Adriano Pires said Belo Monte will help Brazil cope with a five percent rise in energy needs per year.

"In Germany," he said, "10 percent of (electric) energy comes from renewable sources, while in Brazil hydroelectric plants supply 90 percent of its electricity.

"We can't give up now, and that's why Belo Monte is so important."

Brazil is also building two other hydroelectric plants on the Amazon's Madeira River.