The result came after Liberal MP Catherine Cusack crossed the floor forcing her own government to go back to the drawing board.

Ms Cusack on Thursday, November 19 told the upper house she could not back the land management bill negotiated with the Nationals, who had threatened to split from the government over koala policy.

The upper house MP instead moved an amendment to send the controversial changes to a committee for further scrutiny.

The amendment was backed 19 votes to 18, effectively delaying a vote on the bill until next year.

Premier Gladys Berejiklian then stood down Ms Cusack as a parliamentary secretary following the vote.

"Following her decision today to move a non-government amendment to a government bill, I have made the decision to immediately remove Ms Catherine Cusack as a parliamentary secretary," a one-line statement from the premier said.

In September, NSW Nationals leader and deputy premier John Barilaro threatened to blow up the coalition government if concessions weren't made to rural property owners for protection measures over koala habitat.

Port Macquarie MP Leslie Williams did not support her then party's move, eventually parting ways with The Nationals to join the Liberals.

However, the Liberals and Nationals appeared to have reached agreement on policy last month.

"I always predicted we would get it to a very good outcome and I'm really happy with where we've landed," Ms Berejiklian said at the time.

Co-ordinated protests across the state on November 6 aimed to air concerns about changes to the Bill opposers believe will result in koalas becoming extinct in NSW before 2050.

Protests were held in Coffs Harbour, Grafton, Kempsey, Port Macquarie, Sydney, Taree and Tweed Heads.

The Local Land Services Amendment (Miscellaneous) Bill 2020 was introduced into parliament on October 14.

In a statement issued late on Thursday night, Mr Barilaro and Ms Berejiklian said they would revisit the koala policy next year.

"Our farmers deserve certainty and they do not deserve to be held to ransom by a Greens-controlled inquiry," they said.

"The premier and the deputy premier have agreed the NSW government will revert to operations under the former (environmental planning policies) by the end of the month and in the new year we will develop a policy to protect koalas and the interests of farmers."

Greens MP Cate Faehrmann, who chairs the NSW Upper House Inquiry into Koalas, celebrated Thursday's vote.

"What has become increasingly clear is that this bill isn't about the koala SEPP. The National Party seemed to have concocted the crisis around the koala SEPP in order to progress their agenda to remove the government's regulatory oversight of environmental protections on rural land - period," Ms Faehrmann said.

"This is a gross overreach by the National Party and it's incomprehensible that this bill passed the Lower House of Parliament without a peep from the Liberals.

"This bill because it does far more than simply tweak the new Koala SEPP, it reads like the forestry and big agriculture industry's wish list come true.

"It's abundantly clear that this bill was to be the National Party's Trojan horse which would have seen decades of work on the government's primary mechanism to protect koalas discarded and nullify environmental protections on rural land.

"Not a single member of the Liberals spoke to this bill when it passed through the lower house. If not for the courage of Catherine Cusack, the koala would have been sacrificed for the sake of preserving an increasingly fractured Coalition."

Ms Faehrmann said sending the Bill to an inquiry is the best outcome.

"What better committee to examine this bill than the one that just wrapped up its landmark inquiry into koala populations."

NSW Farmers says all stakeholders must come together in 2021 to find a lasting solution which protects koalas and allows for sustainable farming businesses.

President James Jackson said after enduring the worst drought many rural families and communities have ever experienced, farmers were forced to defend their businesses from government intrusion through misguided State Environment Protection Policies.

"The Koala SEPP's overreach into agricultural land has caused farmers and regional communities a great deal of hurt and insecurity this year, so this decision leaves many wondering what has all this been in aid of?" Mr Jackson said.

"Farmers are the front line when it comes to environmental conservation. We stand ready to work to develop a solution to support farmers to take extra steps to look after koalas on their farms - we have consistently said that the NSW Biodiversity Conservation and Land Management framework provides a modern framework to deliver this outcome and we look forward to working with government and all stakeholders to deliver a first world solution early in the new year."

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