Spearheading the campaign is the Australian Gas Alliance, which successfully stopped coal seam gas mining in the region’s water catchment in 2005.

The Alliance now plans to stop the coal mine going ahead and will begin its campaign this week by erecting 200 signs with slogans such as "No Coal Save Your Water Catchment" and "Water Not Coal", the Central Coast Express reported.

The Alliance objects to mining on the basis it would affect water quality in the region’s catchment area.

“This fight affects every single resident of the Central Coast because it's our water supply under threat. The valleys represent 50% of the water catchment for the whole of the coast and if its integrity is compromised we will lose a precious resource forever," Alliance spokesman Alan Hayes told the Central Coast Express.

This is not the first time coal companies have run into community resistance in New South Wales when mining under or near water. Community groups last year protested against the extension of BHP Billiton’s Appin mine under the Nepean River.

The NSW Government tightened its environmental regulations in 2004 in response to community concerns. Any leaseholder planning to embark on underground coal mining that is likely to result in surface subsidence is required to prepare and submit an SMP for approval.

"Should the potential impacts be deemed significant and unacceptable, particularly with regard to adjacent rivers and water supplies, then the proposal will be either modified or refused," according to the Department of Primary Industries.