The fight against Crete's largest tourism project has taken on new force as the country's highest court opened an investigation into the role of a British company involved in the venture.

Athens Supreme Court prosecutor George Sanidas ordered an inquiry into the Cavo Sidero project after a complaint that the London-based Minoan Group, which won a bid for the development, had an unfair advantage over rivals. He also instructed Crete's chief prosecutor to look into the original acquisition of the land by an ancient monastery.

But the British company's operations director, Tim Hill, said the allegations are not based on fact.

"The best procedures have been applied, the most transparent methods used and the best consultants employed," he said.

The 1.2 billion euro scheme has sparked an outcry from ecologists, archaeologists and politicians in recent weeks over new planning regulations that would allow construction on uninhabited Greek isles and virgin coastline to create a 7,000-bed luxury resort on the eastern end of the island.

Protesters say the proposed 2,600-hectare resort would ruin the landscape, and that it is ill-suited to a region that in most other countries would have been designated as a national park.

The land sits on an area of the island that is a biological hotspot, rich in vegetation and rare plants. The 16-mile peninsula also contains archaeological evidence of farming techniques employed in the Mediterranean since antiquity.

The Council of State has received an application from residents and environmental organisations urging officials to reject the government's approval of the development.

Nearly 11,000 people, including more than 500 scientists and archaeologists from more than 80 countries, have signed a petition against the development.

The Athens court said it would announce a decision on the Cavo Sidero some time this year.