Hunter-based Nationals have reasserted their party's demand that new "city-centric" legislation to protect koala habitat needs to be amended.
Upper Hunter MP Michael Johnsen said protecting koalas and their habitat was critical, but it should not prevent strategic planning and development.
"If the SEPP isn't amended to reflect community concerns, even places like Newcastle and the Hunter region will have all sorts of issues trying to grow," he said.
Mr Johnsen said many rural-based constituents had raised concerns about the current legislation.
"An example of a flaw is the listing of a tree species Belah (Casuarina cristata); it is listed as a noxious weed, yet somehow it is koala habitat species," he said.
"Black Sheoak and Forest Oak are listed for koala habitat but they are not even used by koalas."
Myall Lakes MP Stephen Bromhead said, rather than protecting koalas, the new SEPP was designed to make "city-centric law makers feel good."
"This policy is asking rural and regional communities to become an environmental offset as we see koala habitat destroyed to accommodate city developments in places like Western Sydney without a second thought," he said.
"The city bureaucrats who propose this law are the same ones that locked up our forests, failed to maintain them in effect leading to the devastating bushfires that decimated the koala population."
Mr Bromhead said the National Party's proposed changes struck a balance that would protect koalas, farmers and private property owners but provide opportunity for rural and regional growth.
"We can protect the koala population without burying farmers, property owners and developments in regional NSW in green tape," Mr Bromhead said.
Federal Lyne MP David Gillespie backed his state-based colleagues.
"They are standing their ground on a principle they believe strongly in," he said.
"The National Party has the interests of its electorates and koalas at heart. SEPP 44 is a total over-reach; it limits personal property rights, it puts limitations on traditional farming and forestry. It will affect livelihoods and the development of timber products in a major way.
"The National state party has been trying to resolve this behind closed doors, but that hasn't happened and they are taking a stand on a principle they believe in.
"You can't take things away from people who have been doing private native forestry for three and four generations. Koalas need to flourish too but forestry is not the same as deforestation."
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