Environmentalists have lost their high court challenge to the opening of a reprocessing plant at Sellafield.

Greenpeace and Friends of the Earth have campaigned against the mixed oxide (Mox) plant since its construction in 1996. They argued that the new plant could have serious environmental implications and may become a target for terrorism.

However, Mr Justice Collins said that "no error of law" had been made when the site was approved and ordered the environmental groups to pay costs.

The campaigners were also given leave to appeal the decision, a date for which has been provisionally set for November 27.

A spokesman for the Department for the Environment, Food and Rural Affairs welcomed the "high profile" decision.

"We are pleased that Mr Justice Collins has rejected the arguments put by Greenpeace and Friends of the Earth and agreed that the secretary of state has properly interpreted the 1996 Euratom directive. It is an important ruling on a high profile case," said the spokesman.

The Euratom ruling states that approval for developments regarding ionising radiation must be given only if the economic and social benefits outweigh any potential health risks.

A spokesman for BNFL welcomed the "good news" for workers at the plant.

"BNFL is pleased that the court has upheld the government's decision that the operation of Sellafield Mox plant is justified and lawful. This is good news for the plant, the workforce and the local community

"Our customers have been very patient and we now want to get on with the job of manufacturing Mox fuel for them," he said.

Charles Secrett, executive director of Friends of the Earth, expressed disappointment at the ruling.

"Today's judgment allows the government to ignore plant construction costs when deciding whether a nuclear project is justified. In this land of fantasy economics the government can fiddle the figures until it gets the results it wants. Despite this bitter blow the campaign against Mox continues. We owe it to ourselves and future generations to do what we can to stop this nuclear madness from proceeding," said Secrett.

Stephen Tindale, executive director of Greenpeace UK, said: "While today's decision is disappointing, our fight to stop the Mox plant from opening is not over.

"Tony Blair was right when he highlighted the threats from international terrorism and nuclear proliferation in his speech to the Labour Party conference. It is time his actions matched his words and his government stopped allowing activities that will arm the terrorists of tomorrow."