Australian environmentalists have taken action against the environmental approval of the Shenhua Watermark coal mine in Australia's Liverpool plains, arguing the process failed to consider the impacts on the local Koala population.

Australian farmers and conservationists joined forces to bring the legal action to the Land and Environment Court, saying the New South Wales government's independent approval body failed to properly consider if the coal mine was likely to have a significant impact on the local koala population.

Clearing for the mine in Australia's prime agricultural belt would demolish 847 hectares of koala habitat, displacing an estimated 262 koalas across the next 30 years, Fairfax Media reported.

Koalas are listed as a threatened species vulnerable to extinction and protected under Australia's state and federal laws.

"This is the first time the court will be hearing a challenge on the assessment and approval on a project as large as this, looking at the new application of the legislations," said Sue Higginson, principal solicitor for the Environmental Defenders Office.

"So it is a novel case and we are raising novel parts of law," she told the Australian Broadcasting Corporation.

Koala researcher John Lemon, however, said regardless of whether the mine is built, koala numbers in the region are declining.

"If the population was as high as a it was pre-2008, I would say that certainly may be the case (the mine would impact on koala numbers), however (the) numbers have already declined significantly," Lemon said.

The latest action is not the first time controversial mines in Australia have been subject to court action regarding the environmental approvals process.

In early August, the Indian-controlled Carmichael coal mine in central Queensland hit a legal hurdle when Australia's federal court declared the mine's environmental approval was invalid after failing to properly assess its impact on two threatened species.

Following the decision, the Australian government announced amendments to legislation, seeking to limit who can challenge large resource projects and reducing "green lawfare" by environmental groups.

The hearing is set down for four days.