The proposed port on the eastern coast will handle 83 million tonnes of cargo per year, said Santosh Mohapatra, chief executive of Dhamra Port Company Ltd.

The project is a joint venture between Tata Steel Ltd and leading engineering and construction firm Larsen & Tubro Ltd.

"The project has local support and only a small number of people are making unreasonable demands," Mohapatra told Reuters.

On Monday, villagers complained they were losing land to the Dhamra port project without adequate compensation. Some said they will not hand over land for the port at all.

"The administration cannot take away land forcibly and we will fight for the right of the people," Upendra Roul, a lawyer representing the villagers said.

Armed policemen surrounded the site, but protestors were still shouting anti-government slogans, witnesses and officials said.

THREAT TO TURTLES ?

The Dhamra port project has been mired in controversy with international conservation group Greenpeace saying the project would kill thousands of rare Olive Ridley turtles.

The port site in Dhamra is not a turtle nesting ground, but Greenpeace says it is part of a breeding and feeding ground and very near to one of the world's largest nesting areas in Gahirmatha.

"The area is also ecologically significant besides the turtles, and the proposed port should be shifted," Sanjiv Gopal, a Greenpeace ocean campaigner told Reuters from Bangalore.

Officials on Monday said there were no major obstacles and work would resume soon.

Regular protests by villagers have delayed a slew of projects in the mineral-rich state.

A $12 billion steel plant by South Korean firm POSCO and an alumina refinery by Britain's Vedanta Resources Plc are among the main ones yet to take off.