THREE Greenpeace activists were last night spending their second night perched in splendid isolation on the tiny Atlantic lump of rock called Rockall, in protest at oil exploration.

In their first full day on the rock outcrop, 289 miles off mainland Scotland, they set up a small wind generator and solar panels for power and erected a banner proclaiming: "No new oil."

They had landed by helicopter late on Monday to seize control of the small uninhabited rock in protest at the westward extension of oil exploration from the North Sea to the deep waters of the Atlantic.

Barren, tiny and covered in bird-droppings, the 65ft rock is a reference point on the map for oil and fishing limits and has been the subject of periodic sovereignty rows between Britain and, at different times, Ireland, Iceland, and Denmark.

The Greenpeace protest drew a diplomatic response from the Department of Trade and Industry, responsible for oil exploration licensing, which said: "It's part of Britain. They have every right to be there."

The DTI rejected the Greenpeace argument that searching for more oil was "insane and hypocritical", saying that developing the UK's oil resources would maintain supply if ever there was a shortfall.

A spokesman said environmental considerations formed part of the licensing process and were taken into account before exploration licences were issued.

He added that the nearest area for which licences had been issued was 100 miles from Rockall.

Greenpeace said its activists, some of them veterans of the Brent Spar campaign, managed only two hours' sleep after landing by helicopter to take control of the rock on Monday night.

The weather in the area was calm and sunny yesterday but bad weather was expected.

Rockall's new residents - named by Greenpeace as Al, 32, from Newhaven, Sussex, Peter, 40, an Australian, and Meike, 31, a German woman - are living in a bright yellow survival capsule 12ft long by 6ft wide.

Suspended from the helicopter, the capsule was secured to the rock by the activists using heavy-duty straps secured to steel pins screwed into the rock. Greenpeace said more than 30 companies are exploring or intending to explore for oil in the Atlantic, despite scientific findings indicating the climate could not survive the burning of existing oil.

Britain's claim to the rock, geographically vital for fishing limits and oil exploration, was consolidated in 1955 when a party of Royal Marines landed there and hoisted the Union flag.

Since then the island has figured in occasional territorial rows, including one involving Cyprus in 1994 when a Cyprus registered fishing boat was arrested in the area by a Scottish fisheries protection ship.

Its only former resident is Scottish adventurer Tom McClean, 54, who spent 40 days there in 1985 painting a large Union flag, reading, thinking and talking to distant fishermen by radio.

He lived in a coffin-sized box bolted to the rock, raising thousands of pounds for a medical-scanner appeal.

He spent his time in or on top of his survival box and recalled yesterday that it was rather like living in a stationary boat.

"I can't see any sense in what they are doing. I suppose they will sit there and the oilmen will just carry on. But good luck to them."

The Scottish Council Development and Industry looks likely to seek a meeting with Greenpeace to discuss its fears over Atlantic Margin oil developments.

At a meeting in Aberdeen yesterday, the SCDI's executive backed a policy paper calling for dialogue between Greenpeace and the oil and gas industry.

The SCDI, whose members include most major oil companies, feels the advantages of developing the Atlantic Margin outweigh potential risks.

It believes abandoning the Atlantic Margin could mean much less environmentally-conscious production increasing elsewhere.

The council also fears pulling out would damage the British economy.

The UK Offshore Operators' Association has not had any formal meetings with Greenpeace but has an ongoing dialogue with the non-governmental organisations.

The association's Aberdeen director, John Wils, said he would report the SCDI's decision back to UKOOA.