This follows the resignation just three months ago of Minister Ian Macdonald who also quit suddenly under controversial circumstances.

"As a minister I accept that I am held to a higher standard and that's why I have offered the premier my resignation," a chastened McLeay said yesterday, later admitting at a press conference he was "humiliated and embarrassed".

Premier Kristina Keneally, who just last week stated she would be cracking down on the ill discipline of her ministers, said she would be making a substitute appointment to McLeay’s portfolios – which include Ports and Waterways and the Illawarra – soon.

Opposition Leader Barry O'Farrell said the scandal damaged the NSW economy in a region "crucial to our prosperity and future".

“The latest resignation means further instability and distraction for the Keneally Labor government and further frustration for the people of NSW," O'Farrell said.

As the current ALP government limps towards the next election in March next year, mining industry spokespersons are keeping mum about the whole fiasco.

When McLeay, 38, was appointed he was perceived as being a breath of fresh air after the crisis-prone Macdonald, who was dubbed “Sir Lunchalot” for his extravagant expenses.

McLeay, it was hoped at the time, would be more in touch with the workings of a mining industry.

“Through his current ministerial responsibilities and as the member for Heathcote, Minister McLeay has a clear understanding of the contribution and significance of mining in NSW,” NSW Minerals Council chief executive Nikki Williams said at the time.

“Adding mineral resources to Minister McLeay’s Illawarra and Ports and Waterways portfolios makes sense and we look forward to building a constructive relationship over coming months.”

In an interview with ILN in July, McLeay was also optimistic and was flying the NSW flag.

“NSW’s combination of raw resource power and world-leading infrastructure makes it Australia’s premier state for coal development. We have four world-class coal provinces with more than 30 coal mine projects and extensions proposed over the next decade,” he said.

“We currently have plans for constructing the world’s biggest coal loader at Newcastle to keep up with the demands of new markets, including a 320 per cent increase in coal exports last year to China.

“We are also leaders industry innovation; the NSW government is working with industry through partnerships with organisations such as the Cooperative Research Centre for Greenhouse Gas Technologies (CO2CRC), Coal21 and the CSIRO to develop clean coal technologies.

“It’s not just Queensland that should watch out, it’s the world.”

McLeay said the NSW government continually sought all opportunities to make the coal mining industry safer and more competitive.

“We are currently working towards implementing a national standard for [occupational health and safety]. This will make health and safety legislation tighter, clearer and more efficient,” he said.

“Furthermore, the Keneally government is committed to implementing all 31 recommendations of the Wran Mine Safety Review through consultation with industry and unions.”

In terms of infrastructure reform, the NSW government has also been working closely with the coal industry over the past two years to develop the Hunter Coal Export Framework, a historic agreement on managing coal exports from the region, he said.

“The framework came into effect on January 1, this year. It will help boost the coal chain’s planned infrastructure expansions including $5 billion worth of new port and rail infrastructure which is set to double coal export capacity in the next five years,” he said.

“Through this we expect to boost export revenue by $6.5 billion each year, creating up to 25,000 jobs across the coal chain.”