Federal Environment Minister Peter Garrett's approval has helped lift the plan from a six-month legal limbo.

The 106-hectare plan was caught up in a landmark Land and Environment Court ruling, along with several other major Hunter developments.

The court ruled in September that a NSW Government deal with Rose Group for 800 houses at Catherine Hill Bay and Gwandalan in exchange for conservation land amounted to a "land bribe".

Coal & Allied's plan was caught up in the case because the Government struck a similar deal with it for dwellings at Catherine Hill Bay, Gwandalan and Nords Wharf.

The Herald reported in February that the NSW Government had closed a legal loophole, allowing the plans to proceed.

But Coal & Allied spokeswoman Alison Smith said yesterday the company had not received state approval for its project.

"We are working with the NSW Department of Planning and waiting to understand what process we'll follow," Ms Smith said.

The NSW Government is considering the plans under its controversial part 3A planning laws.

Coal & Allied property development general manager Keith Dedden said 850 hectares of land on the peninsula would be conserved, following state development approval.

"This will be a great environmental outcome for the Wallarah Peninsula, as it will help conserve endangered ecological communities and threatened fauna," Mr Dedden said.

"This development will provide new homes, community services and infrastructure in an area earmarked for future growth."