The EU's top court slapped Italy with a giant 40-million-euro fine on Tuesday for ignoring a seven-year-old ruling and failing to clean up illegal waste sites.

Illegal dumping by unscrupulous companies is a burning issue in Italy, with multiple cases of Mafia-backed businesses flouting European law to discharge dangerous materials in high-density areas, especially in the poorer south.

Decades of dumping has inflicted high levels of cancer and other diseases on local residents and eventually brought disgrace to unscrupulous officials who turned a blind eye to the practice.

In its decision, the European Court of Justice said Italy was still failing to fix the problem and must immediately pay a lump sum payment of 40 million euros ($50 million).

"The court concludes that Italy has failed to adopt all the measures necessary to comply with the 2007 judgement and that it is has failed to fulfil its obligations under EU law," a statement summarising the judgement said.

Italy faced a further fine of 42.8 million euros every six months as long as Rome failed to clean-up the illegal sites, it added.

The court said 198 waste sites still breached EU regulations, including 14 which were also in violation of more serious hazardous waste rules.

It warned that "merely closing a landfill, or covering waste with earth and rubble, is not enough to comply with (EU obligations)".

Italian Environment Minister Gian Luca Galletti disputed the decision and said only 45 of the 218 sites mentioned still required attention.

"This is an old problem," he said, adding that 60 million euros had been set aside to complete all outstanding work.

He said Italy would "not pay one euro of that fine, which stems from an old, dangerous way of managing waste that we want to finish with for ever".