The decision was included in a recently released notice from China's state council that more than 60 new hydroelectric projects on three major rivers would move forward under the government's 12th 5-year plan, which covers the years 2011-15.
Five of the projects lie on the upper reaches of the Salween, also known as the Nu River.
Outgoing Chinese Premier Wen Jiabao, a geologist by training, suspended 13 proposed dam projects on the river eight years ago because of environmental concerns.
The lifting of the ban represents a victory for China's influential state-owned power companies and local governments who have lobbied top officials to promote the construction of mega dams, while disregarding potential safety risks and social consequences, the South China Morning Post reports.
"Wen was able to put those projects on hold for eight years but with his tenure coming to an end ... the pro-hydro interest groups are getting an upper hand again," said Wang Yongchen of Beijing environmental group Green Earth Volunteers.
Last week China Securities Journal reported that China is likely to reform its hydropower pricing scheme to enhance profit margins of hydropower investors and further increase their investment in hydropower projects.
California environmental organization International Rivers says the lifting of the ban on mega dams for the Nu River ignores concerns about geologic risks, global biodiversity, resettlement and effects on downstream communities.
While the state council said its decision for the hydropower development followed "scientific and prudent reviews," International Rivers maintains that a cumulative impact assessment for all dams in the Nu basin hasn't been carried out.
It says landslides, triggered by rain and seismic activity, are already common along the Nu River, one of the country's last free-flowing rivers.
Up to 50,000 ethnic minority people would be displaced as a result of the projects and one village has already been relocated, International Rivers says.
Two of the planned dams, the Songta and the Maji, each of which will produce 4,200 megawatts, border a World Heritage Site. That site, UNESCO says, is believed to support more than 25 percent of the world's animal species and 50 percent of China's animal species.
China's plans to go ahead with dams on the Nu, as well as similar projects on the Upper Yangtze and Mekong, shows a complete disregard of well-documented seismic hazards, ecological and social risks" Katy Yan, China Program Coordinator for International Rivers, said in a release.