The comeback of coal as an energy source cleared its first hurdle last night, with the approval of plans for the UK's first coal-fired power station for 20 years.

The £1 billion investment was recommended by the local council, but still faces a final decision from the Secretary of State for Business and opponents are calling for a public inquiry to address the wider issue of using coal for the first time in a generation.

E.on UK, formerly Powergen, wants to replace its existing Kingsnorth power station in Medway, Kent with a clean coal carbon capture system. The power station could also become the prototype for all future UK clean coal projects, if it wins a carbon-capture design competition, the rules of which were outlined by the Secretary of State last year.

It could take up to two years to receive approval from business secretary John Hutton, and even longer if the Government grants a public inquiry. However, Mr Hutton could take advantage of new planning legislation going through parliament to say that there is a national need for a new coal power station and reject calls for an inquiry.

E.on has said that it wants to build a coal-fired power station to give it diversity of energy sources. "It's going to take 15 years to get new nuclear up and running so in the short-term you build gas and in the medium term coal," a spokesman for the company said.

The units would produce enough energy to supply about 1.5 million homes and lead to a cut in carbon emissions of almost two million tons a year.

However, more than 9,000 people have objected to the plans and activists staged a protest at the plant last year by climbing a 200m-high smokestack and chaining themselves to the station’s conveyor belt to prevent it burning coal.

Greenpeace says the units would create a highly carbon-intensive and inefficient form of energy generation and would go against Government policy on climate change and energy sources.

Medway Council gave the go ahead last night but it only holds an advisory role and the final decision will be made by the Government. Diane Chambers, chairman of Medway Council’s development control committee which met last night, said that local opposition to the plans was limited, with interested parties such as the RSPB and the Environment Agency raising no objection.

Mrs Chambers said: “We raised no objection to the plan and the matter will now go to the Secretary of State.“

E.on's existing power station will not comply with the 2008 Large Combustion Plant directive so it will have to be closed. E.on has decided not to retrofit the existing power station with equipment that could remove sulphur and other emissions. "It would be like fitting a new transmission system to a 1970s mini," the spokesman said.

“The local opposition could be counted on the fingers of one hand but clearly there is a wider issue which we hope will go to a public inquiry,” Mrs Chambers said.

Greenpeace has led the campaign against the power station plans but local people are thought to be favourably disposed to the £1 billion of inward investment that E.on is proposing, which would be a significant boost to the local economy.

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