SYDNEY – Australia will overhaul its environment laws in long-awaited reforms after the Greens party agreed to back the centre-left Labor government's legislation on the final day of parliament for the year, Prime Minister Anthony Albanese said on Thursday.

The reforms will establish an independent National Environment Protection Agency to strengthen compliance and enforcement, impose higher penalties for major breaches of the law, and remove exemptions from the legislation for "high-risk land clearing and regional forest agreements."

The Greens said Labor's plan to allow coal and gas projects to use fast-tracked approvals based on "national interest" would also be dropped.

"This is a landmark day for the environment in this country. It is also a good day for business in this country by providing more certainty, reducing delays and making sure that we get better outcomes and improved productivity," Albanese told reporters.

After pledging to set up an independent environmental protection agency in its 2022 election manifesto, Labor has battled criticism from all sides in its efforts to overhaul environmental law in a way that would better protect nature but also speed up the approvals process for projects in sectors such as critical minerals, renewable energy and housing.

The bill drew criticism from Australia's conservative opposition, the fossil fuel industry, and farmers, while mining groups expressed concern about increasing regulation.

Liberal Party leader Sussan Ley accused the Greens of being "at war with gas".

Lobby group Australian Energy Producers said the bill would hamper new gas supply to tight domestic markets and was "simply not in the national interest."

Labor, which lacks a Senate majority, had been negotiating separately with the conservative Liberal-National coalition and the Greens to secure support for the legislation.

The Greens said while the bill remained "woefully short" of what was needed to address the climate crisis their negotiations had improved the legislation.

"Greens pressure made this bill better than the weak laws we have now, and infinitely better than if the government had done a deal with the climate deniers in the Coalition," said Greens Senator Larissa Waters.

She said the party had secured stronger safeguards for native forests, closed loopholes on land-clearing, and prevented Labor from fast-tracking coal and gas projects.

The Clean Energy Council, which represents the renewable energy industry, welcomed the reforms, which will speed up approvals for renewable energy projects that have struggled with complex procedures at both state and federal level.

In early August, Australia's Productivity Commission called for the simplification of renewable energy projects to hit its target of 82% renewable energy in the grid by 2030.