"I really don't want history books to be rewritten on the whim of great-grandkids with a bit like Chinese whispers - listening to their grandparents' tales that are obviously out of context," he said.

Mr Drinkwater was referring to mineralogist William Tipple Smith's formerly anonymous grave at Rookwood Cemetery being marked to acknowledge him, rather than Edward Hargraves, as the "discoverer of Australia's first payable gold".

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Mr Smith's descendant and author Lynette Silver said she found missing documents that proved Mr Smith sent gold nuggets to England and letters detailing his claims that in 1848 he had found a payable goldfield near Yorkey's Corner - three years before Mr Hargraves started the gold rush.

The NSW Government has partly funded the headstone at Mr Smith's grave to mark his newly acknowledged importance.

Though Mr Drinkwater said Ms Silver's new information was "brilliant", he said there was more to the story and Mr Hargraves' place in history should not be downgraded.

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Rather than Mr Smith's find being covered up, he said, it was kept quiet because it was standard practice.

"There was a government policy at the time that gold seeking was to be deemed illegal," he said.

One of the reasons the government gave, he said, was that, "in their words, 'considering the nature of the population, the consequences could be serious'.

"In other words, it [the population] was mainly convict-based, there weren't that many people and they [the government] decreed that all gold remained the property of the English monarch and gold seeking was to be discouraged.

"It was a standard reply for the time."

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The first official gold discovery came in 1823 with James McBrien, Mr Drinkwater said, and "after that, there were many that went to the governor, said I've found gold and they were all told to put it away, forget about it.

"Probably the most prominent was the Reverend W B Clarke, who not only found gold in one, two, even more places, but in 1848, he published a book and it was all about his gold finds and the documentation of the standard government reply. So it had all been recorded. It wasn't a hushed-up thing."

Mr Smith, Mr Drinkwater said, went to Ophir, near Orange, three years before Mr Hargraves and "then it was called Yorkey's Corner for a good reason - Yorkey had found gold there before Tipple Smith knew it existed and therefore the area was named after him for his gold finds.

"So, effectively, Tipple Smith went to a known gold area, he did find some gold, was given the standard reply by the government.

"Later, Edward Hargraves came along. In my opinion, he was a bit more clever, the timing was right and he was able to use that known gold area to start a gold rush that could not be stopped.

"And there was a major court case held in 1891 where the court's findings gave him credit for starting Australia's first gold rush."

NSW's Minister for Local Government Shelley Hancock says she has worked to "right the wrongs of the past" in terms of Mr Smith's contribution.

"The Member of Parliament [Ms Hancock], who acknowledges this, says she was a school teacher and she was teaching that Hargraves was important in this field and didn't realise she was teaching wrong," Mr Drinkwater said.

"She wasn't. She was teaching right."

Mr Drinkwater said the true discoverer of the first payable gold was well before Mr Smith and Mr Hargraves.

"Pre-Tipple Smith, there was a shepherd by the name of McGregor operating out of Wellington and he got caught illegally selling gold directly to Sydney jewellers," Mr Drinkwater said.

"Now, I'd call that payable gold - because he was making a profit out of it; illegally mining it and selling it on.

"The stockmen explorers knew where gold was. They knew it was illegal. They dug it on the quiet.

"And that's why hundreds of goldfields were set up overnight in NSW and Victoria - because once the word go was given, the stockmen just went back to where they knew the gold was and started digging it."