The suspension follows public outcry and a call for the company to stop drilling for coal seam gas in residential areas.

Federal opposition energy and resources spokesman Ian Macfarlane recently backed the concerns of Labor MPs, calling on the NSW government to stop CSG mining in populated areas.

Macfarlane reportedly told AGL it should abandon projects in western Sydney, the Hunter Valley and the north coast of NSW.

“In NSW, I think the industry is on the brink of collapsing,” he told The Australian Financial Review.

“My advice to the industry has been that they concentrate on areas away from rural and urban populations.”

Independent federal MP Tony Windsor recently threw his parliamentary weight behind the fight against coal seam gas in New South Wales.

Environment Minister Tony Burke agreed with Windsor’s comments, telling parliament that while there was nothing in federal powers that could stop drilling, he would be putting pressure on the NSW government.

“[This issue falls] within the jurisdiction of state responsibility but they are a massive issue,” Burke said.

“The federal government has put down the money to make sure the scientific work can be done. For some reason – and you can all work out your own conclusions as to why – Barry O’Farrell does not want that information to inform planning decisions.”

The proposed northern expansion has the potential to supply natural gas to about 580,000 to NSW households and would reduce the state’s reliance on supply from other states to stop a potential gas shortage.

The northern expansion will involve 11 well surface locations.

A Planning Assessment Commission public hearing originally scheduled for February 25 has been postponed.