The Odisha government Friday decided to temporarily suspend land acquisition for Posco's $12 billion steel project in its Jagatsinghpur district due to protests at the site, an official said.
"We have decided to halt the work to avoid any further trouble at the site," a senior district administrative official said.
Police will, however, continue to stay at the site, he added.
Posco's proposed 12 million tonnes per annum steel plant, the largest foreign investment in India, is to come up near the port town of Paradip, about 120 km from Bhubaneswar.
However, there has been almost no progress on the ground due to local opposition.
The government claims the project would create jobs and increase economic activities, while those who do not want to give up their land say the project will destroy their forest-based livelihood.
The administration, which had earlier acquired 2,000 acres of land for the project, now wants to acquire 700 acres more in Gobindpur village.
Although it acquired about 200 acres this week, the work suffered a setback when hundreds of villagers, including women and children, obstructed the officials Wednesday and did not allow them to proceed.
"We did not carry out any work Thursday. The work will resume only when the government will direct us," the official added.
The indefinite hunger strike launched by anti-Posco agitation leader Abhaya Sahu near the site against police deployment entered day four Friday.
Protests also continued in Gobindpur.