Scottish Natural Heritage, the Government's nature adviser, was riding out a storm of protest yesterday after withdrawing its objection to a funicular railway up Cairn Gorm. The fate of the pounds 17m project could now depend on Brussels and the National Lottery.

Conservationists are preparing a challenge through Europe and the courts in order to safeguard the sub-arctic mountain environment, home to rare birds such as the dotterel and snow bunting.

"SNH has failed monumentally in its duty to protect the Scottish countryside," said Bill Wright, of the Cairngorms Campaign which may seek judicial review of the quango's behaviour over the railway.

Not surprisingly, the Chairlift Company was delighted with the decision, describing it as "an important milestone" in the redevelopment of the Aviemore ski area. Hamish Swan, the company's chairman, said it was "a breakthrough for Highland tourism and the local community". An extra 50 jobs have been predicted.

The way is now clear for a formal agreement between SNH, the company, Highland and Islands Enterprise which owns the land, and Highland Council setting legal safeguards for nature protection. Once that is signed, the Chairlift Company will set about raising the capital.

The 2km railway would run on 93 concrete pillars from the mountainside car park almost to the summit of Cairn Gorm, at 1,245 metres one of Britain's highest mountains. It would replace antiquated chairlifts used by skiers and also provide a summer service to a summit visitor centre.

To meet SNH's objection to trippers spilling out on to the fragile mountain top, the company designed a totally enclosed system. Funicular passengers will not be allowed outside when they reach the visitor centre.

This bizarre arrangement was being trumpeted by SNH as likely to lead to less visitor pressure than the present "unmanaged chairlift access".