THE High Court is to scrutinise the Government's decision to award pounds 234m of overseas aid to the Pergau dam project in Malaysia, writes Andrew Gilligan.

Campaigners hailed yesterday's decision as a breakthrough in their struggle to prove that other factors, apart from poverty and need, influence the distribution of aid.

World Development Movement, the Third World pressure group, won the first round of its legal battle to have the Pergau grant overturned on judicial review. In the High Court, Mr Justice Auld said WDM's application could be heard in full - and gave it priority, with a hearing as early as October.

Ben Jackson, WDM's campaigns co-ordinator, said: 'The judge's decision is a major victory. The court has recognised public concern over ministers' use of aid.' WDM is arguing that the Pergau payment - allegedly a 'sweetener' for arms contracts - was illegal under the Overseas Development and Co-operation Act 1980, which says aid can only be given for economic development of a country or the welfare of its people. Government lawyers did not oppose WDM's application yesterday, but a Foreign Office spokesman said ministers would 'vigorously contest' the main action.

Further public exposure for Pergau will be unwelcome at a time when ministers hoped that the furore over arms and aid was dying down.