Campaigners who spent two years vociferously campaigning to block Veolia’s for a multi-million pound deal are celebrating their best Christmas present ever, after the waste company dropped out of the tender.

Veolia was down to the last two bidders for the North London Waste Authority’s �4.7bn waste services and fuel use contract – but the No 2 Veolia Action Group (No2VAG) said the company should be blacklisted because it provides transport, waste, sewage and water services to Jewish settlements in Palestine, which are considered illegal under international law.

The shock news Veolia had withdrawn from the tender process came last Friday, and it is unclear why the decision was made.

The deal, involving seven London boroughs which will cost Hackney �600 million, hit the headlines this month after No2VAG spokeswoman and Hackney resident Caroline Day was blocked from making a five-minute speech at a Hackney Council meeting.

David Lewis, secretary and treasurer of pro-Israeli group Lawyers for Israel, went on to claim silencing her as a ‘victory’, after the Labour party supported Tory Cllr Linda Kelly’s motion to block the speech in a whipped vote.

Veolia declined to comment to the Gazette about why it had dropped out from the tender, and refused to categorically deny it had anything to do with the Israeli settlements controversy.

Ms Day said her group is “absolutely delighted” and lauded the move as a “huge victory for local democracy”.

“Powerful lobbies representing unethical interests in the illegal settlements may have won a short-term victory in silencing me, but in standing up for their right to see their money invested ethically, local people have achieved a victory for justice for the Palestinian people,” she said.

“This really has been the result of very determined collective campaigning across the seven boroughs and huge credit goes to our chair Yael Kahn who has dedicated her life to this for two years,” she added.

The NLWA had been due to take a decision on the tender earlier this month, but bidders were asked to resubmit their tenders and the final choice had been postponed until March.

The NLWA said that Veolia confirmed its withdrawal “has no bearing on the quality and integrity of the projects,” and its chair Cllr Loakes added: “Although it is disappointing that we will not receive competitive bids, we will now work with remaining bidders and undertake work ourselves to ensure that we are still able to deliver long term, sustainable services that are the best possible in both quality and cost terms, and that value for money is delivered for tax payers.”