The federal government will now assess the Australian Rail Track Corporation's 30 kilometre project following the announcement yesterday of NSW Planning Minister Tony Kelly's approval.

That imposed 69 conditions on the project, including the need to draw up a noise management plan and undertake noise and vibration audits.

It followed advice from the Planning Department that the project could go ahead with measures in place to mitigate the impacts on areas such as Rutherford, Farley and Lochinvar.

It concluded the track, expected to boost capacity from 95 million tonnes of coal a year to up to 200 million tonnes, was vital infrastructure and in the public's interest.

Some residents and developers had criticised the project.

Submissions were made about the potential effect on the McCloy Group's $180 million Heritage Green 450-lot subdivision planned for Rutherford, the Anvil Creek development at Greta of 1364 housing lots, a golf course and tourist precinct, Hardie Taree's plans for a motel and tourism development near Singleton and the Farley Landowners Group's for up to 1500 residential lots on 140 hectares.

In response, the corporation altered its plans to place the new track closer to existing tracks and to build it in two phases.

The department acknowledged the implications for land use planning would need to be carefully considered by it and councils, including any impact on the proposed town Huntlee.

Corporation spokesman Brian Dale said it had hoped to start work in late 2010, but the delay in gaining state approval was short.

It was difficult to say when construction may begin while federal approval was sought, he said.

New England Highway congestion would worsen during the work, with hundreds of trucks and cars a day to travel to worksites for the third track and the 40 kilometre Hunter Expressway that is being built at the same time.

The RTA said a traffic management plan must be drawn up.