Wollongong Coal's controversial bid to expand underground operations at its Russell Vale mine has been blocked amid calls for better evidence about its potential impact on the drinking water catchment.

The independent Planning Assessment Commission (PAC) released its review report for the project on April 10. It found the plan required "more work and assessment" before it could be determined, noting it simply did not, at this stage, have "sufficient information or confidence" to determine its merits.

It said it considered the likelihood of the plan causing "significant detrimental impact" on the catchment to be low, but noted the effect if it did occur would be "substantial and irreversible".

Wollongong Coal, formerly Gujarat NRE Coking Coal, had requested permission to expand operations to its Wonga East area, seeking to extract 4.7 million tonnes of coal from eight new longwall mines over five years.

The proposal would allow mining near the Cataract Reservoir, which provides drinking water for the Illawarra, Sydney and Blue Mountains.

The plan caused a flood of concern from environmental groups, Illawarra residents and Wollongong City Council, about the effects of mining on the coastal swamps and the catchment.

Water NSW, formerly the Sydney Catchment Authority, was particularly worried about the risks of water and quality loss.

The PAC recognised the project would provide up to five years' employment for the mine's existing workforce, along with associated economic benefits for the region, but noted its proximity to the drinking water catchment posed "particular risks and challenges".

The release of the report followed a heated public meeting in February where nearly 60 speakers addressed the commission, most noting their strong opposition to the plan.

The PAC concluded that a plan, or a modified version, could be given the green light if issues in the review, including the protection of the water quality and quantity in the catchment, were satisfied.