OSLO (REUTERS) - A memorial to the victims of Norwegian mass killer Anders Behring Breivik is dividing those affected by his attacks, with some suing the government to stop its construction and others welcoming it as a place where they can grieve.

In the same week that Breivik was suing the Norwegian state over his prison conditions, the government said it would go ahead with the construction of the memorial.

Called "Memory Wound", the design is for a 3.5-metre gash in the peninsula facing Utoeya Island, where Breivik shot dead 69 Labour Party youth activists on July 22, 2011.

Before the shooting, the Nazi militant also planted a car bomb outside the prime minister's office in Oslo, killing eight.

A state-appointed jury picked the project by Swedish artist Jonas Dahlberg in 2014, seeing it as "a symbolic wound" in the landscape that "reflected the abrupt and permanent loss of those who died".

But after protests by some residents - many of whom helped rescue teenagers from the lake as Breivik was conducting his shooting - the government suspended construction for further consultations.

"It is good it has now been decided. We have been waiting for this for five years ... It is good to have a place to go to," Lisbeth Kristine Roeyneland, head of the support group for the victims of the attacks and their relatives, told Reuters.

But the project is divisive. A group of residents opposed to the project said it would now try to stop it in the courts.

"We understand the relatives and everyone else who has been involved in July 22: we were a part of it ourselves," said Maria Irene Holtane-Berge, who heads a group of local residents. "But we feel this is much too close. We can't live in a memorial when we are trying to move forward," she told state broadcaster NRK.

Asked about the planned challenge in the courts, Roeyneland said: "We are many. There are thousands of us who have been affected. People have different opinions. Unfortunately, that is just the way it is."