Native forests are still being logged in Tasmania as confidential peace talks between industry and environmentalists near a deal.

Some prime old growth forests, for which protection has long been argued, are being worked, green groups say.

This is despite Gunns Limited's concession that the industry has lost the battle and must move on from native forest to plantations.

The Greens deputy leader, Christine Milne, said a forest in the far south of Tasmania that topped an environmentalists' list for protection had been ''almost completely flattened''.

This old growth forest in the Catamaran district, controlled by the state agency Forestry Tasmania, was first proposed for joining the World Heritage Area 20 years ago, Senator Milne said.

Ken Jeffreys, of Forestry Tasmania, said logging in the Catamaran coupe for sawlogs and pulp wood began in January, predating the talks.

A Gunns spokesman said the company had expressed its desire to move out of native forests. ''Obviously there's going to be a transition time for that,'' he said.