The Hawaii Supreme Court has put the construction of the Thirty Meter Telescope (TMT) on hold due to concerns raised by Native Hawaiians and environmentalists.
The campaigners argue that the project would damage sacred lands for which the court has handed the developers a temporary suspension of their permit until December 2 2015, by which time they hope the issue will have been resolved.
The TMT is set to be constructed on the top of Hawaii Island’s Mauna Kea Mountain, a dormant volcano.
The site was chosen for its climatic conditions which are generally very good for viewing distant space objects through the earth’s atmosphere. Astronomers consider the volcano one of the world's best places to view the cosmos.
The instrument would have a primary mirror spanning 30 metres in diameter and would rank as the most powerful optical telescope on the planet, allowing astronomers to study features at the edge of the observable universe.
The permit suspension follows an announcement by TMT International Observatory, the scientific team behind the project, that site preparation work would begin this month.
"We respect the Court decision and we will stand down between now and December 2," said Scott Ishikawa, a TMT spokesman.
Native Hawaiians see the telescope, which will be bigger than several already built on Mauna Kea, as the latest violation of a site they consider sacred.
Protesters have been gathering at the volcano for months in an attempt to block construction. Early building work on the TMT was originally brought to a halt in April due to protests but resumed in June after the governor of Hawaii promised to dismantle three or four smaller telescopes on the mountain over the next decade.
The previous demonstrations resulted in several arrests. Broadcaster Hawaii News Now reported this week that law enforcement agencies were considering making another round of mass arrests of protesters at the site.
Partners in the $1.4bn (£92m) project include scientists from Japan, Canada, India, China, and the California Institute of Technology. The group says on its web site it would balance the needs of science and Hawaiian culture.
Last week, construction began on The Giant Magellan Telescope situated on a wind-buffeted, 2,500-metre mountaintop in Chile.