The only independent office that reviews complaints from injured workers in dispute over their compensation claims is facing the threat of closure.

The NSW Law Society and Unions NSW have argued for retention of the independent body known as the Workers Compensation Independent Review Office (WIRO), urging the state government to maintain a transparent dispute resolution process.

The WIRO was established in 2012 to deal with complaints about insurers, to review decisions about an injured person's capacity to work and to conduct independent reviews of the system.

The state government has released a discussion paper on potential reforms to the workers' compensation system to simplify the complex dispute resolution process.

The paper suggests a list of options including the creation of a one-stop shop or single dispute resolution forum which would abolish WIRO.Under options three and four WIRO would be abolished and the State Insurance Regulator Authority (SIRA) would absorb its functions.The discussion paper said "the workers' compensation system would lose the independent contribution of WIRO" under these options.