The £300m scheme would have carried electricity from wind farms on the Western Isles to Ullapool via underwater cables. From there the power would have been carried to Beauly in Inverness-shire and then on to Denny in Stirlingshire by overground cables, where it would have fed into the national grid.
Ministers are now looking at alternatives, including the possibility of carrying the electricity underground to Skye.
The proposal, which would cost an additional £150m, has the backing of Charles Kennedy, the Liberal Democrat leader and MP for Ross, Skye and Inverness West.
Another option being considered is to bury part of the transmission line from Beauly to Denny, but Scottish and Southern Energy (SSE), the electricity company, has said that underground cables are up to 25 times more expensive than overhead lines.
The scheme forms part of the government plan to increase the amount of power from renewable sources. Ministers have been forced into a rethink after widespread opposition to wind farms and have now switched their attention to wave and bio-mass power stations.
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Concerns are also growing over the pylons needed to carry electricity from remote parts of the Highlands and the Borders.
“They are noisy, they give off radiation and they are going to spoil the countryside,” said Kenny Logan, whose farm stands in the shadow of the Wallace Monument near Stirling.
“There is also a big health issue associated with these pylons. The research is unclear, suggesting the risk is 50/50, but you don’t put something like that in the countryside if the odds are that high.
“It is coming right through my land and lot of other farmers’ land, but we are sticking together. They can try and offer us money but it will not do any good. They have not got a proper plan in place for our power needs. Scotland is not about wind farms, it is about fantastic countryside.”
Sue Hopkinson, of the protest group Highland Before Pylons, said: “We have only been allowed to examine one set of proposals. Everybody thought that wind power was such a clean and friendly thing, but there is a cost to the landscape.”
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David Bellamy, the television naturalist, has backed the anti-pylon campaign and is due to visit the Western Isles and Ullapool next month.
The Beauly to Denny line would cross some of the most spectacular and popular beauty spots in the Highlands and threaten woodland dating back to the Ice Age.
The European Union is committed to increasing the share of electricity from renewable sources to 22% by 2010. Scotland’s wind potential has prompted the executive to set a target of 40% by 2020.
“We want to find an acceptable route for an overhead line,” said Alan Young, director of communications for SSE. “In situations where an exceptionally high value is placed on visual amenity, we will consider laying underground cables.
“But underground cabling requires work on the scale of motorway construction and there are serious concerns about the environmental effects.”
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Last week Highland councillors agreed to commission an independent study into the costs of running proposed power lines underground, claiming they were sceptical about estimates. SSE has quoted £20m a kilometre compared with £800,000 a kilometre for an overhead line.
Supporters of underground cabling point to Canada, where changes have been made to reduce the risk of cables breaking in harsh winters. They claim one big breakdown in Scotland would cost consumers far more than the cost of underground cabling.