The Tasmanian government has repealed the state’s forestry peace deal after both houses of parliament passed a vote to scrap the plan on Tuesday evening.

The termination of the four-year peace deal, which ended a 30-year battle between environmentalists and loggers over Tasmania’s forests, will remove 400,000 hectares (988,000 acres) of state-wide native forest from reserves for logging.

The Forestry (Rebuilding the Forest Industry) bill passed the Liberal-dominated lower house after being amended in Tasmania’s upper house.

The bill scraps the forestry peace deal, introduced by the previous Labor government, to allow widespread logging in the protected 400,000-hectare area in six years’ time. The peace deal had provided payment to loggers to move away from felling native forests.

The specialty timber sector will have access to a wider 1.1m hectares of previously protected forest for selective logging.

The Liberal state government, which won power earlier this year with a pledge to rip up the forestry peace deal, claims the protection of vast swaths of forest has hindered job creation.

Will Hodgman, Tasmania’s premier, said: “For more than 30 years, environmentalists, with the help of Labor and the Greens, have progressively locked up hectare after hectare of productive forests, destroying businesses and jobs, regional communities and livelihoods.

“We took a clear plan to the election to say “enough is enough” and rip up the job-destroying forest deal.”

But the scrapping of the deal could restart some of the fervent protests previously seen in Tasmania’s forests. The government has introduced tough anti-protest laws, aimed squarely at activists who disrupt timber operations.

Environmentalists argue that the state’s native forests are far more valuable left standing, to be used for carbon storage and also for tourism. Tasmania’s tourism industry employs around 15% of the state’s workforce, compared to around 1% of people employed in the forestry sector.

Jenny Weber, campaigner at the Bob Brown Foundation, said, “Tasmania’s government has issued a licence for native forest annihilation in an era when native forest logging should cease, for climate mitigation and ecosystem benefits.

“At the helm over the unique forests in Tasmania is a government that has legislated for the ongoing logging of wildlife habitat of quolls, wedge-tailed eagles, Tasmanian devils and swift parrots.”

Warrick Jordan, spokesman for the Wilderness Society, said logging in previously protected forest will risk the timber industry’s FSC forestry certification.

“With the passage of this new law the government has chosen to play Russian roulette with the industry’s future and this government will be judged on the environmental damage and industry failure that will result from this legislation,” he said.

In June, the federal government failed in its unprecedented bid to strip world heritage protection from 74,000 hectares of Tasmanian forest. The world heritage area, which covers much of south-west Tasmania, will remain intact despite the end of the forestry peace deal.