Mr Dainton said Normanton and parts of Wakefield were polluted with the stench of compost during the summer of 2003, which resulted from Welbeck failing to turn its compost piles properly.
The Environment Agency issued three enforcement orders in a bid to force tip owners Waste Recycling Group (WRG) to deal with the smell, and examined the possibility of legal action.
RATS (Residents Against Toxic Scheme) has heard that after 18 months the Environment Agency isn't taking WRG to court and RATS president Mr Dainton claims he can smell rotting compost once more.
WRG said it started small-scale compost operations in February, and said it would be working hard to ensure there were no 'odour nuisance issues arising from these activities'.
Mr Dainton said: "It looks as though WRG has waited until its got the all-clear and then started composting again, but in a different place.
"I feel as though the Environment Agency has waited until all the fuss of 18 months ago has died down, and people aren't as upset, so it doesn't have to take WRG to court.
"They only told me they weren't going to pursue legal action when I wrote to them and asked what was happening.
"Everyone was up in arms over the smell 18 months ago. They had to cancel barbecues and couldn't leave their washing out because of the unbearable stink. And it looks like we'll be able to enjoy that all over again this summer.
"I would recognise that vile stench anywhere."
A spokeswoman for the Environment Agency said it had consulted Queen's Council over the matter, which is why the matter took 18 months to resolve.
She added: "A full investigation was carried out and our legal team was consulted. They told us we would be unlikely to secure a conviction against the operator."
The spokeswoman said that as a public authority the Environment Agency had to be sure of a realistic chance of success before spending public money on legal action.
Mr Dainton said: "In the last three months we have had the tip on fire, waste down the riverbank and into the river on three occasions and now compost stench, once again. What else have we got to look forward to?"