Malaysia's Department of Environment has ordered all coastal land reclamation works for the Forest City project be stopped temporarily.
The New Straits Times reported on Tuesday that the stop-work order was issued about a week ago, and all land reclamation works in the area were suspended pending further studies on the environmental effects of the project.
Reclamation off Tanjung Kupang is part of a project handled by Chinese property developer Country Garden Holdings and a Johor government company Kumpulan Prasarana Rakyat Johor.
The planned 2,000 hectare man-made island is expected to include a 49-hectare tourist hub. Reclamation works were estimated to finish by end of 2014.
Singapore recently expressed concern over the project, sending a formal request for Malaysia to provide more details so it could study the possible impact on the strait.
Environmental activists also voiced their worries of any negative effects.
State Health and Environment Committee chairman Datuk Ayub Rahmat told the Malaysian paper that the Johor government valued its ties with Singapore.
"We will wait for the department to complete their studies on the project, after which we will also ensure that all guidelines are met," he added.
Ayub also told the New Straits Times that there was a preliminary Environmental Impact Assessment (EIA) report for the proposed Forest City project.
"Normally, shoreline reclamation projects below 50ha in size, such as the proposed Forest City project, does not need a EIA report under the Environmental Quality (prescribed activities) (Environmental Impact Assessment) Order 1987.
"However, as the project will have a 80-room hotel, increasing the area's density, a preliminary EIA report was conducted and its findings submitted to the relevant authorities," he said.
Here is the statement released by Singapore's Ministry of Foreign Affairs earlier:
"Given Johor's close proximity to Singapore, we are naturally concerned about any possible transboundary impact on Singapore from property development projects that involve reclamation works in the Straits of Johor.
"There are also international obligations for both Malaysia and Singapore authorities to work closely on such matters.
"We have asked the Malaysian authorities to provide more information so that we can undertake a study as soon as possible on the impacts of these reclamation works on Singapore and the Straits. They have agreed to do so and we hope to receive the information soon."