The mills occupy some 600 acres of prime land

The court ruled that some 285 acres of land occupied by defunct textile mills could be sold to private builders.

The developers say they plan to use the space to build apartment blocks and shopping malls.

Environmentalists had campaigned against the sale, arguing that it violated land regulation laws.

This is the end of the issue, unless they change the law Shyam Chainani Environmental campaigner

The Supreme Court judges, SB Sinha and PP Naolekar, overturned an earlier ruling by the Bombay High Court which had said the sale of land by the state-run National Textile Mill violated state laws, the Press Trust of India reports.

In June 2005, the National Textile Mill was sold for 7.02bn rupees ($158m) to Delhi based builder, DLF, in one of India's most expensive real estate sales.

But the sale was opposed by the Bombay Environmental Action Group (BEAG).

One of the petitioners and a BEAG member, Shyam Chainani, told the BBC that he was disappointed by the Supreme Court ruling.

"This is the end of the issue, unless they change the law," he said.

Poor need land

Developer Rajeev Piramal said it was "an extremely positive step for the city".

"The quality of development that's going to happen on mill land is really world class," he said.

Mumbai's textile mills date back to the 19th century, when they were developed to produce cheap cotton textiles for Britain.

But by the 1970s and 80s most of the mills shut down after facing stiff competition and faced with lengthy strikes.

The mills occupy some 600 acres of land in the heart of Mumbai, which has some of the most expensive real estate in the world.

While some argue that the land should be freed up for commercial development, others argue that the priority should be affordable housing for the vast majority of the city's poor.