Forest clearing works will begin after Ibama, Brazil's environment agency, gave the go-ahead for the controversial project, estimated to cost $17 billion.
Ibama gave the dam approval despite strong objections from protesters, who say that years of disinformation helped "greenwash" compelling objections -- in other words, make the project's "bad points" look environmentally sound.
The protesters, who include Hollywood celebrities, argue that devastation from the dam will be widespread along a 60-mile stretch of the river. Supporters say 11 gigawatts a year of electricity to be produced by the 3.7-mile dam by 2015 will help modernize the region and wrest residents out of poverty.
Norte Energia, a Brazilian consortium in charge of the project, has been given the go-ahead to start clearing about 238 hectares of forest along the Amazonian tributary Xingu. The dam is likely to flood a 193-square mile area and partially dry up the Xingu river. Further licenses for actual construction are yet to be granted.
The Norte Energia consortium is made up of the state-run utility Eletrobras, Brazilian pension fund Petros and several local construction companies. Although it was initially opposed by former President Luiz Inacio Lula da Silva he became a strong supporter and was backed up by newly elected President Dilma Rousseff.
Official supporters say they will pursue the project at "all costs."
Protesters say the Bel Monte dam complex, first mooted under Brazil's dictatorial period, won't be necessary if Brazil makes a more efficient use of its existing power generation capacity.
Philip Fearnside of the National Amazon Research Institute said the forests flooded by Bel Monte's reservoirs will generate enormous qualities of methane, a greenhouse gas estimated to be 25 times more potent than carbon dioxide.
Meanwhile, critics are concerned the government hasn't entirely given up on an original idea of building more dams on the Xingu River. One of the early plans for damming the Xingu included six dams but the government changed its position after protests by indigenous residents.
Critics of the project say only a small proportion of the electricity to be generated by the dam will meet residential needs, while the bulk will go toward industrial and mining development, also likely to spread environmental damage in the area.