Swiss, German and Austrian export credit insurers underwriting funds for Turkey's Ilisu dam have halted the project over worries it is failing to meet standards.
The Swiss state-run Export Risk Insurance, Euler Hermes of Germany and Austria's Oesterreichische Kontrollbank issued a statement on Tuesday saying they had ordered suppliers to suspend working on the Tigris river dam for 180 days.
The Swiss, German and Austrian governments agreed that the dam project must meet around 150 conditions relating to the environment, relocation, cultural heritage and neighbouring states.
"There was significant progress in recent weeks to implement the project according to World Bank standards. However, the progress is not enough to approve building measures," the statement said.
Switzerland granted an export risk guarantee worth SFr225 million ($199 million) for the project in March.
Independent experts and development aid groups have repeatedly warned that Turkey has failed to respect international standards on social, environmental and cultural issues.
The dam is part of a larger hydro-power project in the mainly Kurdish region and will result in the resettling of up to 60,000 people.