A £100m incinerator to burn Oxfordshire's waste will be built in either Sutton Courtenay or Ardley.

The Oxford Times can reveal today that the search for a location for the giant plant has been narrowed to just two options. Both are landfill sites where the bulk of the county's waste is buried.

Oxfordshire County Council wants an incinerator capable of burning at least 200,000 tonnes of waste a year to create electricity for thousands of homes.

Choosing incineration as the long-term answer to Oxfordshire's waste problems was always going to be a controversial decision.

But the level of public opposition will only now become apparent, with campaigns in both north and south Oxfordshire set to oppose an energy-from-waste incinerator.

Months of speculation ended today with the announcement that the county council has decided that the incinerator will be built either by the Spanish-owned Waste Recycling Group, which operates the landfill site at Sutton Courtenay, or Viridor, which runs the landfill site at Ardley.

The two companies will produce detailed solutions later this month, with final tenders submitted in the autumn. The contract will be awarded next spring, with the incinerator operating on one of the landfill sites by 2012.

Friends of the Earth opposes burning waste on the grounds that it will add to global warming. But County Hall now faces the challenge of convincing two separate regions of the county that incineration poses no health threat to residents.

Chris Cousins, the county council's head of sustainable development, said: "These plants can and do operate in the middle of cities. The plant must meet strict requirements and has to be licensed by the Environment Agency and the Health Protection Agency, who would simply not allow anything unsafe to go ahead. There will also have to be a full environmental impact assessment."

He said the two shortlisted companies were experienced operators of energy-from-waste plants.

Massive quantities of waste are already carried to both sites, meaning the delivery of waste and impact on roads is unlikely to be an issue. The giant plant would be built and operated by the successful bidder, with the county council charged a gate fee for every tonne of rubbish.

The length of contract will be a contentious area of negotiation, with companies certain to seek guaranteed quantities of waste stretching over years to cover investment in the region of £100m.

As well as delivering electricity, the plant could provide heat to buildings nearby, with bidders asked to explore combined heat and power technology.

Craig Simmons, of the Green Party, said: "The council seems to be pre-empting the planning process. There may be reasons that the sites are unsuitable and good reasons for residents' objections.

"No site would be popular in the county. Sutton Courtenay would appear the more remote, with a rail link, meaning waste could be brought in from London. This raises the issue of whether we are going through this incinerator pain, with the potential health problems, to allow companies to make profit from burning London's waste.

"There may well be spare capacity. We would effectively be subsidising this company through a contract guaranteeing them a waste stream.

"The health issue is not a concern when incinerators are run properly. But there are plenty of examples where this has not happened."

Michael Jenkins, chairman of Sutton Courtenay Parish Council, said: "Local people will hear this news with dread. They are concerned about the health issues.

"People living near the landfill site have put up with operational problems, smell and noise. This will exacerbate them. At least with landfill it was going to end when the land was full. This will go on forever. Sadly all the infrastructure is there."

But the county councillor for Sutton Courtenay, Colin Lamont, said: "An incinerator will be less polluting for the environment than the landfill that is currently going on there. The effluent coming out of it will be purer than the air breathed at street level."

He discounted the prospect of the chimney becoming a local eyesore. "If it is in the middle of the landfill site it will be difficult to see. It won't be a huge thing like Didcot Power Station."

Cherwell District Council leader Barry Wood said the local authority would strongly oppose an incinerator at Ardley.

Mr Wood said: "Cherwell recycles the most and therefore produces the least to landfill or incinerate. In terms of the carbon footprint of the county, it makes sense for the incinerator to be near the places that need it most. In this choice of two, that means Sutton Courtenay. We understand that the modern incinerators do not bring the same health issues that the old-fashioned ones used to. Our concern is about the diesel from trucks going to and from an incinerator."

The county council, as waste planning authority, will itself determine the planning application, unless it is called in by Communities Secretary Hazel Blears. Mr Cousins said the council had no preference between the two remaining bidders, whittled down from eight announced last summer.

Andrew Wood, of Oxfordshire Friends of the Earth, said: "There is no good site for an incinerator. The council is pressing ahead in the face of public opposition."

It is understood that both sites could continue to operate as landfill sites, although the quantities of waste buried would fall significantly.