NSW Premier Gladys Berejiklian has delivered an ultimatum to Nationals leader John Barilaro urging him to stand down from his protest against the government's changes to the koala protection policy.
The Deputy Premier on Thursday announced Nationals MPs would abstain from voting on NSW coalition government bills and "effectively" move to the crossbench over the dispute.
Ms Berejiklian responded by declaring Mr Barilaro and his Nationals colleagues will have until 9am on Friday to indicate if they want to remain in cabinet or follow through with their threat.
"They cannot do both," she said in a statement on Thursday evening.
"It is not possible to be Deputy Premier or a Minister of the Crown and sit on the crossbench. If required I will attend Government House tomorrow and swear in a new ministry."
Earlier on Thursday, Mr Barilaro said the changes to the policy are "wrong" and hurt landowners and farmers.
The Nationals are concerned the policy will limit land use on farms and the ability to rezone areas for development as more trees are classed as koala habitat, which will restrict the clearing of land.
"We will be abstaining from voting on government bills," Mr Barilaro told reporters.
"By not voting or abstaining from voting from government bills we're effectively on the crossbench."
NSW Labor Leader Jodi McKay accused Mr Barilaro of "blowing up the coalition", calling the situation “extraordinary”.
NSW Deputy Premier John Barilaro. Source: AAP
“We have seen the deputy premier effectively blow up that government and blow up the Coalition,” she told reporters.
“What I want to know from the Premier is, does she still have a functioning government?”
Meanwhile, Independent MP Justin Field has urged the premier to hold her line and stand up for nature and koalas.
"This is just another ideological political attack on our environment by the National Party whose policies are destroying our rivers and forests," Mr Field said in a statement.
Nature Conservation Council chief executive Chris Gambian said the Nationals have dictated environmental policy in the state for a decade.
"The koala policy is one small measure to ensure koalas don't become extinct in NSW by 2050," he said in a statement.
NSW Liberal Catherine Cusack also blasted Mr Barilaro and called for his resignation.
"This is an excellent government ... but we can't continue on this track that he's put us on," she said.
The Nationals have 13 lower house MPs, while the Liberals have 35 and Labor 36.
In the upper house, the Nationals have six, the Liberals have 11 and Labor has 14.
