A colony of endangered Little Penguins, the last on the NSW mainland, have had parts of their critical nesting grounds allegedly cleared during building works at a restaurant, the state opposition claims.

The breach is alleged to have taken place despite repeated recent efforts to save the penguins from wild fox attacks at a cost of several hundred thousand dollars, including a network of cameras and snipers.

Little penguins at Manly Sea Life Sanctuary in Manly. Credit:Janie Barrett

Labor alleged that vegetation covering 60 metres of "critical habitat zone" in a NSW national park at North Head was denuded after the Boilerhouse restaurant strayed over the boundaries of its licence during land clearing late last year.

The environment department confirmed last week that a special investigations team by the state's national parks service had not found enough evidence to bring any action against the restaurant.