The controversial koala bill that previously threatened to split the NSW Coalition has been scrapped.

Just months ago, the policy jeopardised the unity of the Coalition when Nationals leader John Barilaro threatened to move to the crossbench, claiming the new protections went “too far” in favour of koalas.

Rather than have the bill examined by a parliamentary inquiry, the government made the snap decision on Thursday night to dump the legislation altogether.

This follows more than six months of negotiations between Premier Gladys Berejiklian and Mr Barilaro to find a balance between koala protection and land rights.

During debate in the NSW Upper House, a vote was put forward to refer the koala bill to a committee which triggers a parliamentary inquiry.

Liberal MP Catherine Cusack crossed the floor and voted with Labor, the Greens, the Animal Justice Party and Independent Justin Field in favour of the inquiry.

Ms Cusack’s vote was the decider, leaving the Liberals, Nationals, Fred Nile and One Nation one vote short.

The ABC understands Ms Berejiklian personally tried to persuade Ms Cusack from voting against the government, but ultimately failed.

Ms Cusack was subsequently sacked as parliamentary secretary.

“Following her decision today to move a non-government amendment to a government bill, I have made the decision to immediately remove Ms Catherine Cusack as a parliamentary secretary,” Ms Berejiklian said afterwards.

Premier Gladys Berejiklian and Nationals Leader John Barilaro.

Just months ago, Ms Cusack was a vocal supporter of the Premier when Mr Barilaro publicly declared he would not support government legislation if the koala bill proceeded.

Ms Cusack accused Mr Barilaro of treating Ms Berejiklian with “extreme contempt” and said his “whole strategy is 100 per cent bullying”.

The Nationals leader eventually backed down when Ms Berejiklian offered an ultimatum – remain in the government, or give up your ministerial portfolios to sit on the crossbench.

With the bill dead in the water, the government will revert to its former policy on land management under the State Environmental Planning Policy, despite it having already expired.

“In the new year we will develop a policy to protect koalas and the interests of farmers,” the Premier said.

It’s understood there is tension between the Premier and Planning Minister Rob Stokes, who had carriage of the now-failed bill.

He said the old rules were “rudimentary” and needed modernising.

The NSW government will end 2020 back at square one on an issue that threatened to tear it apart just months ago.

-ABC