Stop CSG Illawarra has criticised the state government for allowing a loophole that could allow hydraulic fracturing to be practised at coal seam gas wells a few hundred metres from homes near Gloucester on the Mid North Coast.
Under existing rules, proposed CSG developments within three kilometres of existing wells require an EIS.
The proposed change would mean the distance, which was formerly measured from the well head, would be measured from the geometric centre of the well.
Though only relevant to the Gloucester area, Stop CSG Illawarra spokeswoman Jess Moore said the proposed amendment showed the government was changing the laws "on the run to support the CSG industry".
"If they do that to people in Gloucester, of course they can do it to people in the Illawarra," she said.
"Communities have made it clear that land, water and people must be protected from CSG development."
A spokesman for Planning Minister Pru Goward told Fairfax Media the government considered the amendment minor.
"The amendment creates certainty for industry and the community" by removing "ambiguous" wording in the policy, she said.
A state government-enforced moratorium exists on CSG exploration in the Sydney Water Catchment area, affecting much of the Illawarra.