NSW government approval of a coal mine in Sydney's drinking water catchment area is reckless and will damage natural reservoir systems, conservationists say.

The Nature Conservation Council of NSW says the government has broken a pre-election promise to protect water catchments by approving an expansion to the Dendrobium mine, near Wollongong.

The mine expansion would come within a few hundred metres of the Avon dam and is located entirely within Sydney's drinking water catchment area, conservation council chief Pepe Clarke.

"This is an irresponsible activity," he told AAP on Saturday.

"These are the same catchments where you're not allowed to walk a dog, or go into for that matter."

Water is caught by swamps in the area and is then slowly filtered through to drinking water reservoirs, Mr Clarke says.

Drinking water could be lost as the mining process will fracture bedrock under the swamps, allowing it to fall further into the earth, Mr Clarke said.

"Those swamps are a really important part of Sydney's water supply."

Mr Clarke added that BHP, the company that runs the mine, had said water would reappear further downstream.

But the NSW office of environment and heritage believes there "is inadequate evidence to support that claim," Mr Clarke said.

"The concern is that type of mining in our drinking water catchment has a cumulative impact on the quantity and quality of the water."

Comment is being sought from the government.

AAP tj