An appeals court here has stopped oil giant Shell and chemical behemoth BASF from paying $500 million in compensation for hundreds of ex-workers suing for damages in a suspected plant contamination case.

"While the trial is under way and pending a final decision, the money does not have to be deposited," said a source at the regional labor court in Campinas, a city in Sao Paulo state, speaking on condition of anonymity.

Prosecutors in Campinas last week pressed for the money to be deposited in a compensation fund to ensure that the ex-workers get medical treatment while they await a final ruling in the class action lawsuit.

Anglo-Dutch Shell and Germany's BASF were accused five years ago of contaminating workers at a plant in Paulinia, located 102 kilometers (63 miles) from Sao Paulo, which was closed in 2002.

"Several tests determined that there was contamination of the water, air and ground (by toxic chemicals), and that as a result many people suffered from prostate cancer and thyroid gland problems. So far we have counted 61 dead," Clarissa Ribeiro, a prosecutor in the case, told AFP.

The companies said in statements that the Campinas labor court rejected the request by the prosecutors, who launched proceedings to add more plaintiffs to the case, which could affect nearly 1,000 people, including children of the ex-workers.

The ex-workers blamed their health problems on their prolonged handling of chemicals. The two companies were also accused of contaminating ground water near the plant.

"I underwent surgery for prostate cancer, lung and thyroid gland problems. Many others have also been affected and I know that 60 ex-workers died before the age of 55 when the average life expectancy here is 72," said Antonio Rasteiro, a former machine operator at the facility.

Lower courts ordered the two firms to cover the costs of medical treatment.

The case was appealed to the higher court in Brasilia, which is to issue a final ruling at an unspecified time.

In a statement, Shell stressed that it was making payments linked to the medical costs, but said it challenged some exorbitant bills "which bear no relationship to the case."

It also said that the tests could not establish a link between the cancer cases and working conditions at the plant.

And Shell said "most of the deaths" of ex-emplyees were due to "traffic accidents, heart attacks and other causes."

Shell owned the plant from 1974 to 1995, when it sold it to US conglomerate Cyanamid.

BASF, world's leading chemical company, bought the plant in 2000. In its statement, it said the higher court rejected the prosecutors' call for a deposit payment "until all appeals filed by the companies have been reviewed and the trial finalized."