India's Supreme Court Monday gave the go-ahead for a multi-billion dollar dam project but warned it would halt work if displaced villagers were not compensated as promised.

The court's decision ended days of protests by both the advocates and opponents of the Sardar Sarovar dam project in the parched western states of Gujarat, Maharashtra, Rajasthan and Madhya Pradesh.

A three-judge bench headed by Chief Justice Y.K. Sabharwal gave the states one week to report progress in compensating thousands of villagers displaced by the project.

"It has been made clear to the state governments if the relief and rehabilitation is not granted … then this court will have no option but to stop the construction," Sabharwal said.

The conditional go-ahead followed a government review that found people displaced by the multi-billion dollar series of dams had not been given new land, money or housing as claimed, a report said.

Work began last month to raise the height of the Sardar Sarovar, the biggest dam in the Narmada Valley development project, triggering protests led by activist Medha Patkar who launched an anti-dam fast on March 31 in New Delhi.

The fast grabbed front-page headlines after police forcibly took Patkar to a hospital because of her failing health.

Patkar and two other activists ended their fast after the judgement.

"The prime minister must intervene to ensure that the poor affected by the dam construction get justice," she told reporters in New Delhi.

Gujarat chief minister Narendra Modi, who launched a similar fast Sunday in favour of the dam in Ahmedabad city, also ended his protest after the court order.

Advocates say that raising the dam's height by 12 metres (39 feet) to 122 metres will provide much needed water and electricity.

But opponents say increasing the height would displace even more people and submerge more farmland.

According to the UN, more than 24,000 families in 177 villages in Madhya Pradesh would be displaced if the height of the dam is increased as proposed.

States such as Gujarat and Maharashtra argue that raising its height will benefit 40 million farmers irrigate 200,000 hectares (490,000 acres) of barren land and produce nearly 1,500 megawatts of electricity every day.

Source: Agence France-Presse