MOSCOW–Russian Prime Minister Vladimir Putin, who plumbed the depths of Lake Baikal in a minisubmarine in August and pronounced the lake "ecologically clean," has given a well-connected tycoon's paper mill the go-ahead to resume dumping waste there, reversing what had been a landmark victory for environmentalists.

A decree Mr. Putin signed last week removed waste discharges in the production of pulp, paper and cardboard from a list of operations banned by environmental legislation in and around the world's largest body of fresh water.

As a result, OAO Baikalsk Pulp and Paper Mill said Tuesday it will restart operations that it halted in October 2008 after environmental authorities instructed the company to introduce a closed-loop waste-treatment system. Such a system would prevent discharges into the lake, but the company deemed it unprofitable, declared a permanent shutdown in February and began laying off its 2,000 employees. It started bankruptcy proceedings in March.

Mr. Putin's decree brought relief to Baikalsk, where workers had staged hunger strikes and blocked highways for a week in June to protest the demise of the Siberian town's biggest employer. It also resolved a problem for Oleg Deripaska, the tycoon whose control of the plant had cast him as the villain of those protests.

But the measure has enraged Russia's environmental activists, whose campaign against the mill gained widespread attention in the late 1980s as leading Soviet political and literary figures rallied behind it. The effort, disrupted by the collapse of the Soviet Union in 1991,finallysucceeded after environmental groups sued the company and won a 2008 court decision banning the discharge of waste water into the lake.