Bathurst-based ecologist Ray Mjadwesch says he raised concerns with the company in 2001. He later took those fears to the National Parks and Wildlife Service, a move that led to his dismissal.

Mr Mjadwesch's report, prepared after the first year of operation of the Springvale mine, found the poor condition of two swamps "can only be attributed to impacts from subsidence".

Centennial Coal was this week given conditional approval to extend its longwall mining under the Newnes State Forest near Lithgow, giving the Springvale mine another 15 years of operation.

The conditions for the mine extension are still to be settled, but Centennial says narrowing the width of the longwall from 350 metres to 280 metres will prevent the risk of subsidence damage to the swamps.

The Planning and Assessment Commission said the significance of the resource and socio-economic benefits outweighed the potential environmental impacts. The mine is critical to Lithgow's economy and provides coal to the nearby Mt Piper Power station, which generates 15 per cent of NSW's power.

The commission largely accepted the views of the NSW Department of Planning and the company that the damage to the swamps would be "negligible".

Centennial's environmental record has been a source of conflict between the company and environmental groups for a decade, particularly as the swamps are home to the endangered Blue Mountains skink and several rare plants.

In 2011, Centennial was required to pay $1.45 million in enforceable undertakings for damage to four swamps above stage 1 of the mine.

One of the main areas of dispute is the cause of the damage. Centennial claims the visible damage is due to emergency releases of saline mine water into the swamps. "Flora dieback impacts at Narrow Swamp North, Narrow Swamp South, East Wolgan Swamp and Junction Swamp were caused by changes to swamp hydrology related to mine water discharge and were not related to subsidence," it says.

This is despite a 2009 report by the company's own consultants, Aurecon, identifying that flows from East Wolgan swamp were disappearing down a crack in the creek bed to an aquifer 70 metres below the surface. The report was not mentioned in Centennial's Environmental Impact Statement.

The NSW Department of Environment and Heritage, which has studied the site, says "it does not support the direct undermining of Newnes Plateau shrub swamps".

"Despite having significantly damaged News Plateau shrub swamp in the past, Centennial have not provided any definitive evidence or guarantee that further swamps will not be impacted by the current mine," the department said in its submission. It wants the mine redesigned to avoid taking coal from under the swamps.

The federal government's Independent Expert Scientific Committee on coal seam gas and large coal mining development said in August 2014 it expects impacts from the mine extension will be "severe and potentially irreparable".

"There is no scientific literature currently available to demonstrate the effectiveness of potential mitigation or mediation measures. The only known strategy to minimise impacts is to alter the mine layout such that swamps are not undermined by longwall mining."

Despite the strong views of the environmental agencies, PAC has recommended that the mine extension proceed and that any damage to swamps be dealt with through monitoring, an adaptive management program and offsets, which would require the company to buy and protect private land with similar ecology. A final decision is expected soon.

The federal government also has a role in approving the extension because temperate highland peat swamps on sandstone are considered an endangered habitat under federal law.

A spokeswoman for Centennial said Mr Mjadwesch's research, and other studies (at a cost of $15 million), had informed the company's latest application for an extension.