Some 600 hectares (1,500 acres) of land in East Java has been inundated with sludge that began spewing when Lapindo Brantas, a company linked to Indonesia's welfare minister, was drilling for gas without proper equipment in May 2006.

"The decree only reflects the interests of Lapindo Brantas and ignores fair settlements for the victims," their lawyer Taufik Basari told a press briefing.

President Susilo Bambang Yudhoyono issued a decree in April allowing Lapindo to pay a 20 percent tranche of compensation to some 10,000 claimants by mid-September, with the balance to be paid within two years.

Basari said that the regulation had forced the victims to accept only land compensation, with no payout for other losses such as property, material goods and other unaccountable losses.

One of the victims, Lilik Kaminah, told the briefing that the presidential decree had become a "weapon" for Lapindo, allowing it to get away with unfair compensation payments.

"We want all our lost property to be paid for 100 percent, and at one time," said Siti Mukaidah, another victim who has been staying in a refugee camp with her children for more than a year.

Basari said the case would be filed to the Supreme Court at the end of the month.

Engineers spent months this year trying to plug the yawning crater by dropping chains of concrete balls into it, but to no avail. They are now mulling a plan to build a massive concrete dam 15 storeys high.

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