Mumbai: The new Bahujan Samaj Party (BSP) government in Uttar Pradesh has decided to dump the Anil Ambani-led Reliance group''s proposal to set up a special economic zone (SEZ) in the state.

A cabinet meeting chaired by chief minister Mayathi took the decision to scrap the project, citing ''breach of rules'' as the reason. The state government would also recommend the same to the centre.

The state cabinet discussed lapses in allotting 1,200 acres of land to the Anil Ambani group at Noida before arriving at the decision.

The decision, which comes ahead of a formal approval of the Reliance SEZ by the union government, is the first major setback for the recently dethroned Samajwadi government led by Mulayam Singh Yadav.

The state government has also constituted a high-level committee, headed by the industrial development commissioner, to look into all projects cleared by the previous government, such as hi-tech cities, SEZs and other IT projects.

The committee has been asked to give its report within 2 weeks.

In another major move, the UP government ordered that the government will not acquire land for any project and investors will have to deal with the landowners or farmers to purchase land.

The decision was taken in the wake of the farmers'' agitation over the Dadri power project of the Anil Ambani-led Reliance group for which land was allotted during the previous regime in UP.