The New South Wales Government's proposed changes to its koala protection policy may lead to more habitat being destroyed and put the vulnerable species closer to extinction, conservationists fear.

The Koala Habitat Protection policy was introduced by the State Government in 1995 as a response to the decline in koala numbers and habitat.

It was unique at the time because it was the first state-wide, species-specific planning policy introduced by any government in Australia.

Now, the Government is proposing an "update", which it says will "better conserve and manage vegetation that provides habitat for koalas".

At the same time, it said the policy would help councils preserve koala habitat while simplifying the assessment process for development applications.

But Daisy Barham from the Nature Conservation Council thinks the changes will undermine the protection of koala habitat in a number of ways.

"We're really concerned that the Government's proposed changes weaken the definition of what koala habitat really means," she said.

"Areas which are home to koalas will be much easier to destroy."

The council said the requirement for developers to prepare site-specific koala plans had been removed, as had the need for local councils to zone core koala habitat for protection in their Local Environment Plans.

'We're improving koala protection': Government

A spokesperson from the Department of Planning and Environment said they were really trying to better conserve the natural habitat of koalas and worked with councils and koala protection groups to inform the policy updates.

"Contrary to suggestions otherwise, we are proposing to strengthen the controls in the State Environmental Planning Policy to better preserve areas that are vital to koala survival," they said.

"The proposed policy improvements will support councils to prepare comprehensive management plans, make it clearer to assess proposals that may impact koala habitat, and ensure their habitat is considered early in the strategic planning process.

"We are not removing the need for developers to survey their site for koalas and vegetation.

"We're improving koala protection by strengthening the definition that will identify their habitat. This will be supported by the expansion of the list of tree species recognised as supporting koalas from 10 to 65."

Land clearing might prove a fatal blow

The koala is listed as "vulnerable to extinction" under the state and Commonwealth legislation.

The NSW Office of Environment and Heritage, on its own website, acknowledges just how tenuous the koalas' situation is:

Most populations in NSW now survive in fragmented and isolated habitat. Many of the areas in which koalas are most abundant are subject to intense and ongoing pressures, in particular loss, modification and fragmentation of habitat.

Ms Barham contends the proposed changes coming on top of recent amendments to land-clearing laws could prove a fatal blow.

"What the Baird Government has done in the last two weeks alone is allow up to 2.2 million hectares of koala habitat to be bulldozed across the state," she said.

"We're at a really key decision point now — is our vision for the future one where koalas live in the wild, or is it one where our kids have to go to the zoo to see a koala."