Shortly before lodging the appeal with the supreme court, Trade Minister Takeo Hiranuma, who is in charge of the country's energy policy, took issue with Monday's ruling.

"We believe appropriate safety inspections have been conducted at Monju and we can never accept the ruling," Hiranuma told reporters.

The reactor, designed to produce more nuclear fuel than it consumes, has been shut since December 1995 after a massive leak of liquid sodium.

Monday's ruling came as a shock to the government, which had given approval in December for construction work to renovate the reactor.

The rare legal victory for Japanese anti-nuclear power campaigners could undermine the government's efforts to build more nuclear reactors.

A group of 32 plaintiffs, mainly people living near Monju, located in Fukui Prefecture, 400 km (250 miles) west of Tokyo, want the reactor to be permanently shut down, claiming that faulty safety assessments had led to the 1995 accident.

In handing down the ruling on Monday, Judge Kazuo Kawasaki said there were flaws in the safety assessments needed to prevent accidents such as the leakage of radioactive material.

JAPAN'S AMBITIONS AT RISK

Anti-nuclear activists denounced the government's decision to appeal against the ruling.

"It is absolute nonsense," said Masako Sawai at the Citizens Nuclear Information Centre, the biggest anti-nuclear group in Japan. "It is outrageous that the government made the final appeal to force the dangerous facility on the local citizens without acknowledging its mistakes."

Resource-poor Japan relies on nuclear power for about 34 percent of its electricity output and plans to raise that to 40 percent by 2012.

Monju had been a cornerstone of that energy policy.

The government has spent 780 billion yen ($6.56 billion) on the project, including 580 billion yen to build the reactor.

Fast-breeder reactors were conceived in the 1960s with the objective of extending the resources of uranium fuel, but technical difficulties have beset the plants and caused many countries that initially embraced the concept to abandon their costly programmes.

The Monju leak, which sparked a fire, plus other accidents at nuclear facilities, including a 1999 accident at a nuclear fuel reprocessing facility in which two workers died, have increased public mistrust in the nuclear industry.