The move follows sustained and high-profile opposition to the State Government's approval in June of Peabody Energy Australia's Helensburgh Metropolitan Colliery expansion project, which controversially included mining directly under the Woronora Reservoir.

It is understood Illawarra Coal, a BHP Billiton subsidiary, has now submitted its environmental assessment to the NSW Department of Planning.

If, as expected, the assessment is deemed adequate, the plans will be publicly released within days and a public consultation period will begin, before the department reaches a final decision about the middle of next year.

Illawarra Coal faced heavy criticism in the 1990s for damage caused to the Cataract River.

Illawarra Coal's general manager sustainable development and external affairs, John Brannon, said he believed the new proposal was more environmentally and economically balanced.

"Standing off all rivers and most of the major creeks is also about demonstrating that we are prepared to be environmentally sensitive and to do that at an economic cost to our business," Mr Brannon said.

"Our plan for the future in the Bulli Seam reflects the company's approach to mining in the region for the long term, providing employment and generating wealth for the local communities in which we operate."

Consent for present mining operations at the Appin and West Cliff mines, also the location for this new expansion, expires next August.

If approved, the $367 million expansion would mean 1200 direct jobs at the mines could be retained. Coal production from the two mines would increase from about 7.5 million tonnes per year to a maximum of 10.5 million tonnes.

Some facilities, like the West Cliff coal washery, will need upgrading to cope with the larger amounts while more coal would have to be transported by truck to BlueScope Steel and the Port Kembla coal terminal for export to countries such as China and India.

Total Environment Centre natural area campaigner Dave Burgess said the mining giant could expect close scrutiny of its environmental assessment by many interested parties.

"It's welcome that they are not going directly under rivers but the key question is how close the buffer zones are and what the impact will be on other waterways and ... swamps," he said. "We are going to be watching it very closely."

Rivers SOS secretary Julie Sheppard said Illawarra Coal was "not game to mine under rivers ... after the catastrophic damage they caused to the Cataract River and Georges River in the past".

"We think that is a win."