Fifty Thai villagers representing communities along the Mekong river filed the suit against the state-run Electricity Generating Authority of Thailand, the energy ministry and the Thai cabinet at the Administrative Court.

"The river is our life. A dam will definitely affect our lives," said 52-year-old Niwat Roykaew, who lives alongside the Mekong in the northern Thai province of Chiang Rai with his family and relies on it for water and fish.

Communist Laos, one of the world's most under-developed nations, hopes the Xayaburi dam will help it become "the battery of Southeast Asia".

Thailand has agreed to buy most of the electricity generated by the project, but Cambodia and Vietnam fear the dam could decimate their farming and fishing industries.

Laos has promised not to start construction of the actual dam structure until the concerns of its neighbours have been answered, although it says preparatory work has begun.

Environmentalists fear the proposed 1,260 megawatt dam will have disastrous environmental effects and harm the livelihoods of millions of people.

Opponents hope that a court ruling in their favour will cause Laos to rethink its plan.

"We are confident if there is no demand, there will be no supply," said Pianporn Deetes with International Rivers, a campaign group involved in the legal challenge.