In announcing her decision on Tuesday, three days earlier than it was due to be handed down, Ms Ley said strict new conditions had been attached to the expansion including the establishment of a 74-hectare koala habitat corridor to "support local populations".

"I recognise that the proposal has been subject to a high profile public campaign that has tapped into the genuine concerns we all share about koalas and bushfire impacted areas," Ms Ley said.

"In respecting that concern, I have delayed this decision to ensure a thorough review of all previous reports and ensured the department commissioned and funded its own independent report from one of the nation's most respected koala experts.

"The clear finding from the NSW Government and the Commonwealth department is that Brandy Hill's expansion, to be staged over the next 25 years, will not rob the area of critical koala habitat.

"The 74-hectare koala corridor can however play an important role in nurturing local populations and in delivering a net gain for local koalas by providing better quality habitat than is there at present."

The decision will come as a blow to Seaham and Brandy Hill residents and members of the Save Port Stephens Koalas campaign, who had been pinning their hopes on the minister rejecting the expansion.

The group had crowdfunded an expert report by University of Newcastle scientists to provide "evidence of the presence of breeding koalas near the quarry and the quality of the habitat".

In recent weeks, opposition to the quarry expansion had been growing, with celebrities such as Olivia Newton John, Jimmy Barnes, Magda Szubanski and Celeste Barber lending their voices to the campaign.

Port Stephens MP Kate Washington, who is also the Shadow Minister for Environment and Heritage, said she was angry and disappointed with the decision.

"It just shows how our federal and state policies and laws are failing our environment and our koalas," she said. "The community's campaign was incredibly strong and I'm really disappointed that they have been ignored as well."

Greens Senator Mehreen Faruqi, an opponent of the expansion, said the minister's decision was "devastating" and "a betrayal of the environment and our irreplaceable koalas".

"This decision takes koalas a step closer to extinction," Ms Faruqi said. "No amount of offsetting can bring back habitat that has been destroyed. It is a total and complete scam. Once a critical habitat is gone, it's gone forever."

In September, resident and campaign spokeswoman Chantal Parslow Redman said it was crucial that the minister rejected the project.

"We've already lost a quarter of koala habitat on public land in NSW during the black summer bushfires," she said. "That makes the remaining unburnt habitat - including this habitat here in Port Stephens - that much more crucial."

In a statement to the Examiner, Hanson said it welcomed the minister's decision and that it paved the way for the start of operations under its new development consent.

"Throughout the assessment process Hanson has sought to understand the concerns of the community," the statement said.

"This feedback is demonstrated in the expansion plans, which include: revegetation of a 74ha koala habitat corridor, conservation of approximately 450ha of vegetation under a biodiversity offset, construction of new bus bays and a shared pathway along Brandy Hill Drive, enclosure of all processing equipment for best practice management of dust and noise [and] a program of community engagement and events.

"Hanson has been a long-term employer in the Hunter region with many staff living in the communities surrounding the quarry. The approval of the expansion has secured the quarry's existing jobs: 50 direct positions at the quarry, plus another 150 indirect jobs in the area.

"Hanson is committed to protecting all wildlife and recognises the importance of the koala to the Australian community. Over the past six years, the project has been refined to reduce environmental impacts."

The quarry expansion was granted by the Independent Planning Commission in July, but required federal approval because the project had been deemed likely to have a significant impact on a matter of national environmental significance.

The approval, now with the minister's tick, will see the Brandy Hill quarry extraction area extend by 55 hectares and the company more than double its rock production from 700,000 tonnes to 1.5 million tonnes per annum.

The increase in production will also see an increase in the number of trucks, to 600 a day, coming in and out of the quarry.

Ms Ley had twice delayed her decision about the rock quarry expansion to have more time to consider reports about the site and the impact the project could have on the marsupial's population and habitats, including her department commissioning a study by koala expert Dr Stephen Phillips.

The minister said that report used on-site assessments to map the extent of the koala population and land use. She said the study determined that as few as one or two koalas were present in the proposed construction area.

"It is critical that we closely examine all assessments in the light of bushfires and habitat loss, but also important that we make informed decisions," Ms Ley said.

"This is not a region where bushfires have impacted local populations or habitat, it is not a site that is supporting breeding populations and, having reviewed the department's recommendations, I have approved the proposal."

Ms Ley said the 74-hectare koala habitat corridor would include bushfire buffer zones and protection for the marsupials from cars and dogs. She said that was in addition to the requirements already put in place by the state for Hanson to fund habitat offsets.

The minister said Hanson would spend about $2.5 million to secure an additional 74 hectares for the expansion project that was worth about $22.5 million.

Hanson said it has dedicated an area of 74ha to koala habitat establishment that would be replanted in five stages. The company said it would invest more than $2 million into replanting this area across a 10-year program.

"The establishment of this habitat will ultimately provide koala habitat that is of greater quality than currently exists as Hanson will also implement supplementary measures to improve the habitat. This includes bushfire suppression, drought protection, appropriate fencing, weed management and feral animal controls," Hanson said.

"Hanson will continue to engage proactively with all relevant stakeholders, including the local community and looks forward to continuing to play an active role in the community by supporting local jobs and the economy."