A protest has failed to stop a scheme which could see a new incinerator built to burn Bristol's rubbish.

Last night, the city council's ruling Labour cabinet decided to push ahead with a funding bid for a new strategy to deal with waste in the city, South Gloucestershire and North Somerset.

Opponents say phase three of the West of England waste management strategy could lead to an environmentally unfriendly and costly incinerator being built at Avonmouth.

The strategy is aimed at finding the best way to dispose of the waste produced by Bristol, South Gloucestershire and North Somerset and includes incineration among the options.

At the moment, the three authorities pay to have non-recyclable waste taken to landfill, something the Government wants to reduce.

In October, the cabinet approved an outline business case to bid for up to £80 million to help fund the new strategy, under a Private Finance Initiative.

But the decision was "called-in" for further debate by Liberal Democrats, who believe incineration should be off the agenda. They also believe the PFI deal would tie the city council to a costly contract for the next 20 years.

The issue was returned to cabinet last night with a series of recommendations from the call-in panel but executive members unanimously decided to stick with their original decision.

Executive member for sustainable development Mark Bradshaw (Labour, Bedminster) insisted all options were open and no decision had been taken to build an incinerator.

The conflict has arisen because submitting a PFI bid requires the authorities to use a hypothetical example of a method of waste disposal they could use, but it must have a proven track record.

That excludes more modern methods of waste disposal, so the council have used incineration as its so-called "reference technology".

Around two dozen members of campaign group BAMBI – Bristol Against Mass Burn Incineration – turned out to the meeting to make their views known.

They waved placards which claimed the incinerator would cost taxpayers up to £615m, money that would have to be paid back over a quarter of a century.

The group was formed by the Lib Dems, the Greens and Friends of the Earth, who believe more environmentally friendly and cheaper waste disposal options won't be considered by the Labour-run cabinet despite reassurances.

Jane Stevenson, Bristol Friends Of The Earth coordinator from Southville, said: "Many studies, old and new, show communities living close to incinerators, even modern facilities, suffer higher rates of cancer and respiratory problems."

Steve Comer (Lib Dem, Eastville) said: "The decision to use mass burn incineration as a 'reference technology' is controversial.

"To use an old-fashioned and dirty technology will be hugely damaging to our environment."

A statement was submitted by one company, Ethos Energy, who had hoped to be considered for the waste disposal contract, but claim the city council failed to work with them.

Adam Shore, managing director, said his company was now considering legal action against the authority because it had spent £3m laying the groundwork for a plant at Avonmouth that may now be wasted.

The Lib Dems have promised to scrap any incinerator plans should they gain control of the council in the local elections coming up in June, but have warned this could prove costly to taxpayers.

They believe the three authorities would be better served by several smaller waste disposal centres rather than one centralised plant.

Speaking after the meeting, BAMBI members said they were disappointed by the decision but not surprised.

Cllr Gary Hopkins (Lib Dems, Knowle) said: "The problem with putting all their eggs in one basket is that all plants have to be switched off at some point for maintenance.

"We don't need a 160-tonne plant. Other authorities with incinerators try and find waste to fill it because they're paying for it anyway. They are contracted to feed the beast."