Laos has postponed construction of a controversial dam on the Mekong, an official said Thursday, dismissing fears that the work was going ahead despite growing regional opposition.

"There is no construction on the Mekong river," Viraphonh Viravong, director general of the Ministry of Energy and Mines' department of electricity, told AFP by telephone.

Thai company CH Karnchang announced in April that it had signed a contract worth $2.4 billion with the Xayaburi Power Co. "for the engineering, procurement and construction" of the Xayaburi hydroelectric power plant.

The firm added that construction would take eight years and had commenced on March 15, sparking concern that the project was proceeding despite the concerns of countries lower down the Mekong river.

But Viraphonh said only preparatory work had so far begun.

"Preliminary work like roads, accommodation and preparing for the power plant when the Lao government approves the project have been under way for a while now," he said.

In December, the Mekong River Commission -- composed of the governments of Cambodia, Thailand, Laos and Vietnam -- said the dam project should not proceed until further studies on its impact were carried out.

"The Lao government will wait for the approval from the concerned countries," said Viraphonh, adding that a new report on the expected impact had been submitted to Laos' neighbours.

"I'm confident that the new report will make them understand and the dam project can proceed."

Laos is one of the poorest nations in the world and sees hydropower as vital to its potential future as the "battery of Southeast Asia", selling electricity to its more industrialised neighbours.

Cambodia and Vietnam fear the effects of the 1,260 megawatt Xayaburi dam on their farming and fishing industries. Thailand, however, has been more enthusiastic and has agreed to buy most of the electricity from the project.

Environmentalists have warned that damming the main stream of the waterway would trap vital nutrients, increase algae growth and prevent dozens of species of migratory fish swimming upstream to spawning grounds.

Officials in Vietnam said this week they would review a number of their own roughly 1,000 hydropower projects following the appearance of cracks in the major Song Tranh 2 dam.