Environment minister Maria Mutagamba told Reuters the government had shelved it, pending a cabinet committee study.

"There is a suspension until the committee reports back," Mutagamba said. "It is an extensive process -- it is not going to be finished in a week or a month."

A protest to save Mabira last month turned violent, leaving three dead, including an Indian man stoned to death by rioters.

Mehta is owned by an ethnic Indian family.

Mutagamba said the lands ministry would draw up a map of land available to investors in Uganda for sectors such as coffee, sugar, manufacturing or tourism, to see if there was alternative land for Mehta's sugar.

Critics say razing part of Mabira would destroy a fragile environment -- drying up rainfall, threatening a watershed for streams that feed Lake Victoria and removing a buffer against pollution of it from Uganda's two biggest industrial towns.