An exhibit planned around the biblical story of Noah's ark has had its eligibility for tax rebates rescinded.

Kentucky officials said that the exhibit's organisers plan to use religious affiliation as a screening tool for potential employees - a violation of an alleged agreement between the parties. 

"Ark Encounter" was designed by the nonprofit subsidiary of the Christian ministry Answers in Genesis - Crosswater Canyon. 

The park will feature a 500-foot-long wooden ark, and is expected to cost $73 million. 

State officials said the project was originally presented as a tourist attraction, and that Croswater Canyon agreed not to discriminate in the hiring process. 

"Certainly, Ark Encounter has every right to change the nature of the project from a tourism attraction to a ministry," Tourism Secretary Bob Stewart wrote in a letter to Crosswater Canyon attorneys.

"However, state tourism tax incentives cannot be used to fund religious indoctrination or otherwise be used to advance religion."

After the park is in operation, tax rebates of up to $18 million would have applied over ten years.

Governor Steve Beshear, a strong supporter of the project, backed Stewart's decision.

"It has become apparent that they do intend to use religious beliefs as a litmus test for hiring decisions," Beshear said in a statement. 

Answers in Genesis admitted to tourism officials last month that they plan to  "include religion as a criteria in its future hiring decisions." The organisation also operates the Creation Museum in Petersburg, Kentucky. 

Construction on the Ark Encounter has begun in Grant County near Williamstown, and Gov. Beshear affirmed that the project can continue. He envisions the Ark Encounter as a "successful attraction, drawing visitors and creating jobs, much like the Creation Museum."

Answers in Genesis Outreach Vice President Mark Looy said the group is exploring its legal options.