A cage-free zoo set to open in western Sydney this year has again ruffled the feathers of a rival outdoor wildlife attraction, less than a year after its out-of-court settlement with Taronga Zoo over the right to use the name "Sydney Zoo".

Sydney Zoo, a new $36-million development in the Western Sydney Parklands at Bungarribee near Eastern Creek, is now in the midst of a tussle with the 47-year-old Featherdale Wildlife Park - and cuddles with koalas are at the centre of it all.

Featherdale Wildlife Park has operated in Sydney for almost 50 years. Credit:Louise Kennerley

The legal stoush, which is progressing through the NSW Land and Environment Court, comes almost two years after the state government's planning and assessment commission imposed a number of conditions on Sydney Zoo to ensure that it differentiated itself from the attractions and experiences offered at nearby Featherdale in Doonside, just three kilometres away.

For example, Sydney Zoo is not to offer a "koala interaction experience", its animals must be two-thirds "exotic species" upon opening, and the zoo must vary the type of animal encounters it offers to set its native wildlife apart from that of Featherdale.