Independent MP Justin Field said it was a step in the right direction that the government had acknowledged the effect coal mines had on the city’s water supply.

“However, in their usual fashion the Coalition is handing over a blank cheque to their friends in the coal industry with no limitation on water take, no clear costing mechanisms and no protections for the catchment,” he said.

Lock the Gate Alliance NSW Coordinator Nic Clyde said the water licenses were an attempt to legitimise the behaviour of mining companies that had been removing water for years.

“After years of saying there would be no impact on water supply from these coal mines, the government has now been forced to admit uncontrollable losses of water, due to the cracking of creeks and rivers.

“However, instead of responding to this devastating risk to our future by urgently banning any further longwall coal mining in Sydney’s drinking water catchment, the government will instead provide water entitlements from urban water supplies to paper over the problem.”

He added the move was particularly concerning as the country looks likely to head into an El Nino weather pattern – which typically brings drier and hotter conditions. The last time an El Nino cycle impacted Australia resulted in droughts and severe bushfires.

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Underground mining in the catchment has become particularly controversial during the drought as the levels of Sydney’s dams drop faster than at any time since as least 1940 even with the city’s desalination plant at full tilt.

Environmental consultant and former mining manager for Water NSW, Peter Dupen said water removed by mining companies needed to be carefully calculated and compensated.

“Wars are already being fought over water, and the value of clean water for Greater Sydney’s growing population must be recognised and protected,” he said.