The Australian state of New South Wales (NSW) faced an unusual political crisis this month in which the government almost collapsed due to a bitter feud over protecting koalas.

In what seemed a peculiarly Australian ordeal, the state's National Party threatened to effectively withdraw from the ruling Liberal-National Coalition over laws that safeguard koala habitats by raising the number of protected trees from 10 to 65. The measures were introduced following a parliamentary report warning that koalas will be extinct by 2050 without urgent intervention to prevent habitat loss.

But the Nationals, a rural-based party, threatened to end its parliamentary support for the government over the measures, saying the koala changes were unfair to farmers and would limit land use and prevent the clearing of trees. Eventually, it backed down after Liberal leader and state Premier Gladys Berejiklian agreed to discuss the issue at a future Cabinet meeting.

The "koala war" has highlighted ongoing concerns about the level of protection for the environment in Australia, which has a notoriously poor record of extinction of species and destruction of forests.

Australia has the world's worst mammal extinction rate, with about 34 mammals lost since European colonisation 230 years ago. Causes of the extinctions include the introduction of non-native animals such as cats and foxes, and land clearing - mainly to enable urban development and agriculture - as well as the changing climate.

In 2018, a report by the World Wildlife Fund (WWF) listed Australia's east coast among 11 regions facing the most severe deforestation, making it the only developed nation on a list that included Indonesia and Brazil.

But environmental protection remains a thorny political issue. The Liberal-National Coalition, which is in power federally, has tended to be split between the city-based Liberals and rural-based Nationals. And the Liberal Party has long been split on climate policy between moderates, who support strong action, and a resistant conservative wing.

The federal government is currently pushing ahead with controversial laws that will hand environmental powers to the states and territories, effectively making them responsible for examining the environmental impact of major developments. Critics say this will allow greater scope for mining firms, farmers and developers to raze bushland and override protections for flora and fauna.

Environment Minister Sussan Ley insists the laws will remove red tape and speed up approvals, and are necessary to assist with the economic recovery from the Covid-19 crisis. She said earlier this month the move "will reduce regulatory burden, promote economic activity and create certainty around environmental protections". She had also assured that the government would introduce "strong rigorous environmental standards" alongside the new environment laws.

But conservation groups say the changes will weaken environmental protections and lead to further species extinctions. Environmental groups, including the WWF and Australian Conservation Foundation, wrote to Unesco earlier this month, warning that the changes could exacerbate threats to Australia's world heritage areas.

They said handing controls to states and territories was risky as their governments were "often the proponents of these threatening developments and activities or have policies that encourage and fast-track them".

The laws have passed the House of Representatives but are yet to be approved by the Senate, where the coalition does not have a majority.

The opposition Labor Party is against the laws, saying the government should include a set of national environmental standards and create an independent regulator to enforce protections. Other independent and minor party MPs said they will not support the legislation unless it is first reviewed by a committee.

An independent review of Australia's existing environmental protection legislation is due next month. But an interim report in June backed moves to overhaul the protection laws. "Australia's natural environment and iconic places are in an overall state of decline and are under increasing threat. The current environmental trajectory is unsustainable," the report said.