The Environment Agency said it is minded to approve Peel Energy's biomass combustion plant in Trafford, plans for which were rejected by the local authority in 2011.
The EA said in a statement: "Following a rigorous assessment process, we are minded to give approval to Peel Energy and grant an environmental permit, however there is still time for local people to submit comments or information with the Environment Agency in writing before 11 July 2012. It is the Environment Agency's role to regulate energy from waste sites and a draft decision to grant an environmental permit to Peel Energy will not affect the need for them to gain planning approval before construction of the proposed plant can go ahead."
The EA continued: "The draft permit imposes strict conditions to ensure that local people and the environment are protected. If the facility does go ahead, we will ensure that it adheres to rigorous standards and will watch closely to make sure the conditions of the permit are met."
Gordon Whitaker, EA's environment manager for Greater Manchester, said: "We have carried out a thorough assessment of the application. We have consulted widely receiving comments from other organisations, including Trafford and Salford Councils, Trafford and Salford Primary Care Trusts and the Food Standards Agency. Following this assessment and comments from health experts we are confident the facility will not harm the environment or human health.
"Although we have reached the stage where we are considering issuing a permit, our decision is not final and this last stage of consultation will give everybody the chance to see what the permit may look like and to raise any additional concerns before we make a final decision.
"The draft environmental permit and decision document, which outlines how we have reached our decision is available for members of the public to view. Any new comments should be made in writing by 11 July 2012. An information session is planned on 12 June at the Lucozade Powerleague Trafford Soccer Dome, Trafford Park, between 2-7 pm for people wanting to ask questions on the draft decision."
Jon England, Peel Energy's project manager, said: "We are encouraged by the draft recommendation and the Environment Agency's confidence that the facility will not harm the environment or human health.
"We await the end of this last consultation and look forward to the Environment Agency's final decision on the BREP operating permit."
Peel Energy's planning application for a 20-megawatt biomass-fuelled power station known as the Barton Renewable Energy Plant was submitted to Trafford Council on 2 December 2010.
Planning officers recommended approval but the planning committee refused the proposal.
Peel Energy decided to appeal the decision through the Planning Inspectorate at a public inquiry and is hopeful an inquiry will be held. The Secretary of State has yet to set a date for an inquiry.