The federal government has signalled it is willing to make its proposed environmental protection agency (EPA) more business-friendly, in a major concession to win Coalition support that environment groups have branded a "betrayal".

Prime Minister Anthony Albanese hinted at the tactical shift in an interview in Western Australia on Monday, when he pushed Opposition Leader Peter Dutton to back resources industry calls to pass a watered-down version of the agency which would mirror the Morrison government's approach to nature conservation.

Instead of creating an environmental watchdog furnished with the power to approve or block project approvals, Mr Albanese for the first time indicated his willingness to establish an EPA charged mainly with overseeing existing nature protection laws.

The ABC has confirmed the government has made a judgement that it would prefer not to make an alternative deal with the Greens on the reforms, which were part of a broader package of environmental protection changes announced ahead of the last election.

Resources sector desperate for deal before election

Sources said the government had been consulting with business, particularly in the resources sector, which was desperate for a resolution ahead of the next election and a potentially hung parliament.

Instead of delegating environmental approvals to an EPA when it came into force on July 1 next year, the decision-making "call in" powers would remain with the environment minister.

The shift triggered condemnation and accusations of broken election promises from the Greens and pro-climate environmental groups.

The choice to use a visit to WA to reveal the shift, which sources said had been "brewing for a few weeks" between the PM and Environment Minister Tanya Plibersek, was significant.

The resources-heavyweight state was critical in securing Mr Albanese's 2022 win. And Labor is now increasingly eager to present a pro-mining, pro-business outlook after drawing flak for its union-friendly industrial relations changes and the state government's aborted cultural heritage protection laws.

All eyes are now on a delayed Senate committee report into the EPA legislation, due on Monday when parliament resumes.

The Labor-controlled committee pulled the report last month, a sign it was still seeking a compromise with other parties.

Mr Albanese said the government wanted to engage with the Coalition and industry to "get it right".

"One of the things we're considering is whether the new EPA would be compliance-only," Mr Albanese told The West Australian newspaper in an interview. 

That would enable the legislation to get through parliament, he added.

Coalition confirms 'good, frank' engagement

Shadow Environment Spokesman Jonathan Duniam confirmed the Coalition was in talks with the government, saying he "met with Tanya [Plibersek] directly" and had a "good, frank conversation around where we are at".

However, he said there was "a long way to go" on the reforms, which Labor promised would include replacing environmental regulations passed by then-prime minister John Howard more than two decades ago by the end of last year.

"Instead all we're talking about here is a new bureaucracy," Senator Duniam told Sky News on Monday. 

"Labor called it a 'tough cop on the beat', but now they're apparently willing to water it down to really be nothing more than a name and logo change. 

"It rather makes a mockery of their agenda here."

Environmental groups and the Greens slammed Labor's preference for a Coalition deal.

"If Labor does a dirty deal with the Liberals to further weaken our already-weak environment and climate laws, Labor will lose any shred of environmental credibility it still thinks it has," Greens leader Adam Bandt said.

Greenpeace said it was "deeply alarmed" by reports Mr Albanese was "considering caving in to billionaire miners and greedy developers railing against environmental protection".

"Capitulating to vested interests by weakening the EPA and pushing off further critical law reform until next term would betray the promise to fix Australia's broken nature law," Glenn Walker, a Greenpeace spokesman, said.

"The outcome would be more forest and habitat destruction, more wildlife killed, and a diminished natural environment for all Australians."

Climate Council policy head Jennifer Rayner said all the government's progress on renewable energy and climate pollution would be undone if nature laws were not fixed.

"The Albanese government promised comprehensive reform of this law, but now it seems nature will be left vulnerable with a weak environment protection agency and no further improvements to the law on the cards before the next election," she said.

Ms Plibersek defended the government's approach and said Labor was still talking to all parties, including the Greens.

"There is something in this for everyone — the whole idea is to have a system that is both better for nature and for business," she said.

"Sensible, lasting reform will give industry the stability it's looking for, and nature the protection it needs."