The $220 million, 52-turbine wind farm planned for Bald Hills in South Gippsland had been forecast to reduce greenhouse gas emissions by 435,000 tonnes and had already been approved by the Victorian Government.

The population of the orange bellied parrot is thought to be less than 200, but the nearest colony of these birds is 50km from the wind farm.

Campbell supported his rejection with an expert report which found that a collection of planned wind farm projects, not just the development rejected yesterday, "might" kill one orange-bellied parrot a year.

Auswind has described Campbell’s decision as politically motivated move that could destroy investor and developer confidence in wind energy, despite Campbell’s public statements about the importance of renewable energy in combating climate change.

“The minister’s own report shows that if you combined all the wind farms in Victoria, South Australia and Tasmania – including 14 which haven’t been built yet – the total effect would be less than one orange-bellied parrot killed per year, compared to the 100 which die each year from other causes,” Auswind chief executive Dominique La Fontaine said today.

“So you really have to ask whether the Australian Government is serious about establishing a renewable energy industry to help cut our greenhouse gas production.”

Auswind argues the risk posed to wildlife by increased emissions – a likely outcome of impeding the progress of renewable energy development in Australia – is much more probable.

An Auswind statement today said: “A paper published in the respected scientific journal Nature just last year said conservative estimates show one quarter of all plant and animal species facing extinction by 2050 if we do nothing about greenhouse, and the minister is worried about one single bird!”

The Business Council of Australia said the decision to protect the orange-bellied parrot at the expense of the wind farm had the potential to risk future investment in renewable energy.

"It's not clear what the process has been in terms of this decision being made at this late hour," Business Council spokesman Mark Triffitt said.

"It demonstrates there needs to be greater clarity around the approval processes for these projects, otherwise investment that everyone wants in alternative energy, in renewable energy, just won't occur."

Developer Wind Power is considering legal action over the ruling.

Victorian Premier Steve Bracks suggested that the decision was influenced by political donations to the Howard Government by fossil-fuel energy companies and was intended to shore up voter support in the federal marginal seat of McMillan.

The Bracks Government’s support of the wind project is longstanding, with Wind Power receiving the necessary state approvals two years ago.