The New South Wales Government will discuss establishing a national park south of Sydney to protect the state's last chlamydia-free koala colony under threat by urban expansion.

Key points: The NSW Environment Minister will talk to cabinet about establishing a national park for the state's last chlamydia-free koala colony

The NSW Environment Minister will talk to cabinet about establishing a national park for the state's last chlamydia-free koala colony It comes after approval was given to build thousands of houses in the Mount Gilead area, south of Sydney

It comes after approval was given to build thousands of houses in the Mount Gilead area, south of Sydney Environmentalists are concerned the development will destroy the koalas' habitat

Environment Minister Matt Kean will raise the issue with cabinet after recently visiting the proposed site of the park along the Georges River in the Macarthur region.

Mr Kean inspected the colony along with several crossbench MPs, environmentalists, and community groups concerned about the koalas' future.

"I went down to visit the area and see the issue for myself, so we can find a solution to not only assure these koalas survive now but so they can thrive into the future," he said.

The Government is facing a difficult challenge to protect the expansive koala habitat from the urbanisation of south-west Sydney and Mr Kean said they needed to find a long-term solution.

"The biggest threat to our koalas is the loss and fragmentation of their habitat, so it's really important that we protect their habitat from development and destruction," he said.

"My focus is seeing what opportunities there are in that south-west area to protect the koalas in perpetuity.

"One of the ideas we have is creating a koala reserve along the Georges River."

Encroaching development

The State Government has been facing mounting pressure to act to preserve the colony of around 500 koalas from urban development.

Campbelltown City Council's Local Planning Panel voted in favour of approving the first stage of the 1,700-home Mount Gilead housing development earlier this year.

Mount Gilead is an important geographical feature for the local koalas as it provides the shortest route between the Georges and Nepean Rivers.

The national park proposal includes crown land along the Georges River, in yellow, while a safeguard for koalas to travel between the Georges and Nepean Rivers is marked in red. ( Supplied: NSW Government )

Mr Kean said the second stage of the Mount Gilead project would not be approved without the Government seeking assurances from developer Lendlease that the corridor would be protected.

"Gilead stage one has been approved but Gilead stage two certainly hasn't. That's something I'm looking at very closely," he said.

"I want to make sure the right processes and protections are in place for our koalas."

The Mount Gilead development is part of the State Government's plan to add 35,000 homes to the Greater Macarthur region by 2040.

The project was announced by former planning minister Anthony Roberts who released the Greater Macarthur 2040 interim plan in 2018.

The project promised to protect koala habitat and corridors from development by managing the boundary between conservation land and urban development.

Mr Kean said he would be working closely with all the relevant ministers including Anthony Roberts' successor, Rob Stokes, to ensure the promise would be kept.

"It's going to require a whole-of-government response including the Planning Minister and also the Transport Minister to ensure we can build appropriate corridors for koalas to be able to cross Appin Road and access water down at the Georges River," Mr Kean said.

"I've asked my department to provide a full briefing, but we need to look at a number of things including looking at what we can do to protect the koala habitat located at the site of Gilead stage two.

"But I'm not going to back down from standing up for our environment and standing up for our koalas."