The Manx government has "failed" in its decision to scrap conservation plans for Ramsey Estuary, according to the Isle of Man Friends of the Earth (FOE).
Environment Minister John Shimmin has axed plans to make it an Area of Special Scientific Interest (ASSI).
Ramsey commissioners argued the move would present an obstacle to the town getting a marina in the future.
An FOE spokesman said: "The minister has failed to protect an important and vulnerable national habitat.
"This decision was a bad one, apparently forced by local special interests. It is the most significant remaining estuarine habitat, which includes intertidal mud flats and salt marsh."
The plans to make Ramsey Estuary an ASSI would have meant government restrictions on all development in the area.
Environment Minister John Shimmin said; "It would have created a period of uncertainty as we attempted to 'regularize' activities which have been carried out in the same way for decades."