The O'Farrell government has rejected a Labor push to keep coal seam gas activity out of Sydney's water catchments, despite a pre-election pledge to ban the practice.

Opposition Leader John Robertson introduced legislation to Parliament on Thursday seeking a ban on coal seam gas operations in designated "special areas" surrounding major water storages. The move would rule out about 371,000 hectares around Sydney, the Illawarra, the Blue Mountains, the southern highlands and Shoalhaven.

Labor is seeking a ban on coal seam gas operations in designated "special areas" around major water storages. Credit:Glen Hunt

Labor will also investigate banning coal seam gas activity from catchments in the Hunter, the central coast and north coast. It follows calls by the Sydney Catchment Authority, as reported by Fairfax Media on Thursday, for coal seam gas mining to be banned in the same areas proposed by Labor, because it "may significantly compromise" water supply assets.

Mr Robertson said coal seam gas licences renewed by the Coalition as recently as March still covered Sydney's water catchments.