Coal seam gas and large coal developments will face greater scrutiny under federal laws designed to ensure new mining projects don't put water reservoirs at risk.
But farmers won't have the power to stop coal seam gas (CSG) and coal mining companies from entering their land, after a proposal by the Australian Greens was shot down in the Senate.
Under the new laws passed by parliament on Wednesday, water will now act as a trigger in Australia's national environment legislation for the first time.
Any new CSG or large coal projects that could potentially harm water reservoirs would need the assessment of an independent expert scientific committee before being approved.
Environment Minister Tony Burke will have the power to consider the cumulative impacts on water of new CSG wells and large coal mines, and impose penalties for breaches.
The bill passed the Senate after a marathon three-day debate which saw a large number of amendments moved by both the coalition and the minority Greens party.
A Greens amendment to grant farmers "lockout" powers wasn't successful, with Labor deeming it a constitutional risk and the coalition claiming it conflicted with state laws.
Efforts by the opposition to clarify what constituted a "large coal mining development" were also voted down along with other amendments.
The coalition had since Monday spoken at length in the upper house on the bill and its amendments, prompting Labor to gag debate several times.
But in the end the coalition supported the legislation, acknowledging there were "genuine" community concerns about the potential impact of CSG projects on water supply.
"We understand the imperative of protecting our water resources, and we want to make sure they are appropriately protected," Liberal senator Simon Birmingham told the upper house.
Nationals senator Barnaby Joyce - who is running against independent MP Tony Windsor for the lower house seat of New England in the upcoming election - also put the coalition's support on the record.
Community anxiety over CSG and coal mining has been rife in New England, and the changes will please Mr Windsor.
The independent MP had called for independent scientific oversight of new projects when he agreed to support the minority government after the 2010 election.
Until now, the federal government could only intervene on issues relating to water if a threatened species or RAMSAR wetland was involved.
The Environment Protection and Biodiversity Conservation Amendment Bill 2013 passed the Senate without amendments and now proceeds for royal assent.