Sydney's drinking water could be contaminated by a major mine expansion in the New South Wales central west, a court has been told.

The Land and Environment Court has begun hearing a challenge to the approval of Centennial Coal's Springvale mine expansion, near Lithgow, which will extend the life of the mine by 13 years.

An independent report by hydrogeologists has previously questioned the impact of an expansion of long wall mining on swamps in the area.

The Environmental Defender's Office (EDO) claims the water discharge from the mine will increase salinity in the Cox's River and ultimately, Warragamba Dam.

EDO principal solicitor Sue Higginson said the discharge was not properly considered by the Planning Assessment Commission (PAC).

"There is an enormous amount of discharge every day, of mine water which is highly saline and contains heavy metals that will be discharged into the water catchment," she said.

The court challenge rests on a clause in the State Environmental Planning Policy, which requires a development to have a "neutral or beneficial effect on the quality of water".

"This mine will not have a neutral or beneficial impact on water quality," Ms Higginson said.

Discharge water subject to 'rigorous' assessment process

A Centennial Coal spokeswoman denied claims of water contamination and said it faced a "rigorous" and "exhaustive" assessment process that lasted five years.

"The Planning Assessment Commission imposed rigorous performance measures for discharge water which were regarded as appropriate by both the EPA and Department of Planning", the spokeswoman said.

She said the court challenge put the jobs of 300 workers at the Springvale mine at risk.

"After fighting to secure our Springvale approval, we will fight to retain it and protect the livelihoods of our local community," she said.

The hearing, before Justice Rachel Pepper, is set down for two days.