The government said on Friday it had bought back and extinguished petroleum exploration licence 463 formerly held by Dart Energy.

The permit extended from Bundeena on Sydney's southern edge up to Palm Beach and Gosford to the north, and west to Rooty Hill.

Resources and Energy Minister Anthony Roberts said the government was continuing its reversal of exploration licences that had been granted "like confetti" across the state by the former Labor government for as little as $1000 each, with little oversight or protection of water, agriculture or the environment.

"[Labor leader] Luke Foley is now trying to rewrite history by pretending this deplorable mismanagement by Labor didn't happen in an attempt to steal votes where it suits his election campaign," Mr Roberts said in a statement.

The government's NSW Gas Plan has reduced the area covered by exploration licences to 15 per cent of the state, Mr Roberts said.

'Desperate' policy

Adam Searle, Labor's Shadow Minister for Energy, said the CSG moves were "desperate policy on the run", made because the Liberals were "petrified" to talk about their centrepiece electricity privatisation platform.

"The Liberals are trying to hoodwink the community into believing with just 22 days to go to the election that they now want to crack down on CSG licenses – they've had four years to do this," Mr Searle said.

"Labor called on the government to implement a moratorium across the state in 2011 – they've done nothing until election time," Mr Searle said.

Labor this week announced it would permanently ban CSG in the Northern Rivers and set "no-go" areas in key water catchment areas, including Sydney's.

Premier Mike Baird declined to confirm a media report that the government had paid $200,000 for the CSG exploration licence.

"It is a relatively nominal amount for the peace of mind that will be provided to the community," Mr Baird told a media briefing at Sydney's Lady Macquarie's Chair overlooking Sydney Harbour.

"They had a licence right here," he said. "How this licence was ever issued, only they can answer."

'Anti-CSG auction'

The Greens want a permanent and complete ban on the whole coal seam gas industry, including closing AGL's gasfields near Camden and Gloucester and Santos' pilot field near Narrabri.

Jeremy Buckingham, Greens NSW MP and mining spokesman, welcomed what he called "an anti-CSG auction" from the government and Labor.

"It might be occurring now for cynical electoral reasons, but it is clear that fracking for coal seam gas has no future in NSW, with all sides of politics now competing to crack down on the toxic industry," Mr Buckingham said.

"It's now clear that coal seam gas has no social licence to operate in NSW and Santos, AGL, Metgasco and others should cut their losses and cancel their projects," he said.

"The cancellation of PEL 463 is a great victory for the activists and many thousands of Sydneysiders who have campaigned against the ridiculous plan to frack for gas under homes, schools, hospitals and workplaces," Mr Buckingham said.

Earlier this week, the government cancelled two petroleum exploration permits for coal seam gas formerly held by unlisted miner Pangaea Resources in northern NSW.

Pangaea said it had handed back the licences after its exploration efforts turned up little of interest.

The government indicated there may be more licence buybacks to come.

"We have a number of companies that have approached us, and they formed a view that for whatever reason they would like to sell the licences back to the government," Mr Roberts said. "We are reviewing those and we are in negotiations with them and there will be further announcements."

Spring Farm

Local campaigners, meanwhile, sought to hand Mr Baird letters outlining their concerns about AGL's Camden gas field.

The petitions call for Spring Farm residents to be granted the same two-kilometre buffer from CSG wells that applies elsewhere in the state, according to Daniel Robins, a local campaigner for Our Land, Our Water, Our Future.

"The people of Sydney expect to be safe in their own homes, but the residents of Spring Farm have to have the consequences of intensive CSG mining daily," Mr Robins said in a statement.

The call comes a day after AGL was fined $15,000 for a gas leak at a Spring Farm well last August, which the Environment Protection Authority attributed to poor maintenance by the company.

AGL's new chief executive Andy Vesey last month announced a review of the company's entire upstream gas business after a series of problems, particularly at its pilot field near Gloucester.

With Jake Saulwick