Indian mining giant Adani's plan to build one of the world's largest coal mines in Australia today suffered a setback after a court in the country revoked the government's environmental approval for 16.5 billion dollar project.

Adani's environmental authority has been set aside after the court found Environment Minister Greg Hunt had not properly considered advice about two threatened species – the yakka skink and the ornamental snake in the Galilee basin, The Sydney Morning Herald reported.

Environmentalists hailed the federal court's ruling against the controversial Carmichael mine as another setback for the project. The latest decision was announced by the court following the case filed by Mackay Conservation Group which launched the challenge earlier this year.

Sue Higginson, who represented the Mackay Conservation Group, said there was now no legal approval for the mine in central Queensland. The group said the judgment ruled the approval by Environment Minister was invalid on environmental grounds.

"What can happen from here is the Minister can re-make his decision, and of course in re-making that decision he can approve the mine again following the proper legal procedures, or he can refuse the mine; that is the legal power open to the Minister," Higginson said.

"What our client says is that if the Minster wants to reconsider approving the mine there is a plethora of new evidence and information about that mine, so it will be no simple task to simply re-approve that mine. "So really, the Carmichael mine is in a state of legal uncertainty," Higginson said.

"With the consent of the parties, the Federal Court has formally set aside the approval of the Carmichael Coal Mine and Rail Project," the Environment Department said in a statement.

"This is a technical, administrative matter and to remove this doubt, the department has advised that the decision should be reconsidered," the statement said. "Reconsidering the decision does not require revisiting the entire approval process.

"Without pre-empting a final decision about the project, the department expects that it will take six to eight weeks to prepare its advice and the supporting documentation, and for the Minister to reconsider his final decision."

Responding to the new ruling, Adani, which recently suspended work in a number of areas on the mine as it awaits government approvals, attributed the ruling to a "technical legal error" and said it was confident the matter would be rectified.

The company said it was committed to ensuring its mine, rail and port projects in Queensland are developed and operated in accordance with Commonwealth and State laws and regulations, including strict environmental conditions.