The NSW Government has abandoned its plan to sell off the state's forestry corporation after bushfires damaged a quarter of the softwood plantations.

Key points: Bushfire damage to the state's timber has halted the privatisation

Bushfire damage to the state's timber has halted the privatisation Labor welcomed the plan being halted, citing job security as a positive

Labor welcomed the plan being halted, citing job security as a positive Unfunded promised projects in the state remain in question

The transaction was expected to raise about $1 billion as the latest in a line of privatised assets by the State Government.

But recent bushfires — which damaged about 25 per cent of Forestry Corporation's softwood plantations — have halted the plan.

Forestry Corporation manages the profitable commercial softwood plantations which produce timber for housing construction, covering about 230,000 hectares of radiata pine forests in central, south and north-west NSW.

The Corporation also manages the less profitable hardwood plantations which were not part of the privatisation plan.

The Government had not formally committed to selling the softwood plantations, but the NSW Treasurer Dominic Perrottet stated his intention by announcing a scoping study last August.

The findings of that study were delayed at the beginning of the year so a damage assessment of bushfire-ravaged areas could take place.

This season's unprecedented bushfires damaged 5.4 million hectares of land in NSW, however, all remaining bushfires have been brought under control.

Mr Perrottet and Gladys Berejiklian have halted the plan to privatise, citing bushfire damage. ( AAP: David Moir )

"The significant damage to the sector caused by the recent bushfires was obviously a key factor in the decision made by the NSW Government," Mr Perrottet said.

"We are committed to ensuring the forestry industry recovers from the fires and the thousands of people who are employed in the sector have a strong and secure future."

NSW Labor welcomed the move to stop the sell-off, saying it would provide much-needed certainty in rural and regional communities who rely on employment from the timber industry.

"This is great news for Forestry Corporation's 560 workers, including over 200 in the softwoods division," Opposition spokesman for natural resources Paul Scully said.

But he slammed the scoping study as a "grotesque spending spree".

"It's disappointing that the NSW Liberal and Nationals Government have put hundreds of workers through emotional turmoil for months while they just wasted millions of dollars paying out money to high-priced Sydney-based merchant bankers, lawyers and accountants," Mr Scully said.

It is unclear what the decision will mean for the unfunded infrastructure projects that have been promised, including the Western Harbour Tunnel and connection to the northern beaches.

The privatisation of the state's electricity asset — poles and wires — paid for several projects including WestConnex and the Metro City and South West.