Department of Lands bureaucrats arrived at the village at 11am to announce that community management of the village common was being revoked.

A licence for access and grazing was being passed to Ashton Coal.

The two-part, 90-hectare common was granted to the community in the 1880s as a grazing and recreation area and was managed by a community trust until yesterday.

The village's dwindling community has clung to the common in recent years as a last line of defence between the mine's expansion and their rural lifestyle, and the trust has sent many complaints to the State Government about Ashton Coal's encroachment on the land.

Mining activity will now come within 500 metres of the village.

"What's happened today is that the Government have given Ashton control of our village," trust secretary Deidre Olofsson said. "They are basically saying 'get out'."

Ms Olofsson also accused the Government of reneging on a land transfer deal with the community, agreed to in 2002.

A spokesman for Lands Minister Tony Kelly said it was necessary for the Government to intervene because negotiations with the community had broken down.

The village would be compensated with a 10-hectare parcel of land that was part of a previous land exchange with Ashton Coal.

The spokesman said Ashton Coal had not been given ownership of the common.

"The land in question is Crown Land reserved under the Crown Lands Act. Revocation of a reserve can occur under this Act," he said.

"Ashton Coal will have legal tenure over the site via a licence for access and grazing."

The trust's legal representative, The Environmental Defender's office, has been asked to investigate a possible legal challenge to the Government's action.

The Herald has reported extensively on the community's concerns about the impact of mining on their community. In the past two years large cracks have appeared on sections of the common, while lead levels 20 times higher than recommended have been found in drinking water.

Fourteen families still live in the village.

Resident Col Stapleton said he and others would be forced to find alternative arrangements for grazing their cattle. "It's just one more thing that is making it more and more difficult to stay here. But we won't give up."