A multi-million pound project that would have led to radioactive waste being buried along the North Ayrshire coastline has been abandoned in the face of protests by local residents and environmentalists.

Investigations into a £3.2 million plan to bury large amounts of radioactive graphite underground at Hunterston have been suspended by the UK Government's Nuclear Decommissioning Authority (NDA). The area is said to be vulnerable to coastal erosion. Now the graphite waste will be stored in a huge engineered storage facility recently built at Hunterston.

Critics had also feared that burying the graphite would free up space in the storage facility for waste from other nuclear sites across the country. They have welcomed the decision to drop the graphite burial project.

"I'm glad the radioactive waste will be going to the store where it is retrievable," said Rita Holmes, who represents Fairlie Community Council on Hunterston's stakeholder group.

The graphite comes from two old reactors which are being dismantled at Hunterston. On an adjacent site there are two reactors that are still generating electricity for consumers.

The NDA's spokesman, Bill Hamilton, stressed that it had been a good project, and it had shown that an underground store was feasible. But the risks of delays and rising costs forced its suspension.

Pete Roche, a nuclear consultant in Edinburgh, described as "misconceived" the idea that nuclear waste could somehow be safely disposed of underground. "Radioactive substances will eventually leak out – we can't wish them away," he said.

He pointed out that Sepa had warned of the potential dangers of coastal erosion and rising sea levels at the site due to global warming.