Beijing: Beijing has urged Myanmar to protect the rights of Chinese companies after the government halted construction of a USD 3.6 billion China-backed mega dam following public opposition to the project.

Myanmar President Thein Sein on Friday ordered work on the Myitsone Dam on the Irrawaddy River to stop -- a decision hailed by the United States as a sign of the military-backed leadership was listening to its people.

But Chinese Foreign Ministry spokesman Hong Lei on Saturday urged "relevant countries to guarantee the lawful and legitimate rights and interests of Chinese companies".

"The Myitsone power station is a jointly invested project between China and Myanmar" and it has been "rigorouslyexamined by both sides", Hong said in a statement.

Hong called for both sides to "properly handle" the matter through "friendly consultations".

China is Myanmar's second-largest trading partner and biggest foreign investor, and the comments are a rare public display of discord between them.

The dam in the northern state of Kachin was backed by energy giant China Power Investment Corp and has attracted opposition from pro-democracy and environmentalists testing the limits of their freedom under the new nominally civilian regime.

In March Myanmar's junta handed power to a new government  whose ranks are filled with former generals.

Green groups have warned the dam project would inundate an area about the size of Singapore, submerging dozens of villages, displacing at least 10,000 people and irreversibly damaging one of the world's most bio-diverse areas.

Friday's announcement marked an unexpected U-turn by the Myanmar regime. Local media had quoted the minister for electric power as saying last month that construction of the dam would go ahead despite public concerns.

For the people of Kachin, the Myitsone dam has come to symbolise the struggles they have faced for decades as a marginalised ethnic group in the repressed nation under almost half a century of military rule.

Activists have urged China Power Investment to remove workers and equipment from the site and to allow local villagers who were forced to relocate to go home.

The Burma Rivers Network, a network of groups representing dam-affected communities, has also called for six other mega dams planned on the Irrawaddy's tributaries to be scrapped.

In recent weeks fighting has erupted between ethnic rebels and government troops in the area.

In April, a series of bomb blasts at the site of the Myitsone Dam destroyed cars and buildings and left one man wounded.