The state government of Queensland has been stripped of its regulatory approval powers over the $6.4-billion Alpha Coal Mine project betweenHancock Coal owned by Gina Rinehart and India's GVK Power & Infrastructure, Australia's federal government said on Thursday.

Australia's federal and Queensland governments have been bickering for over a week over the alleged careless approval the state government extended on the project concerning its possible impact to the Great Barrier Reef and its immediate environment.

The two governments, led by Queensland's Deputy Premier Jeff Seeney and Environment Minister Andrew Powell and Federal Environment Minister Tony Burke, met Thursday morning in Sydney to discuss the dispute and possibly arrive at a conclusive and amicable decision on the matter.

"The meeting with Deputy Premier (Jeff) Seeney and minister (Andrew) Powell today was productive and is hopefully the first step in resolving the differences which have unfolded between the commonwealth and Queensland over the past fortnight," Mr Burke said in a statement.

However, "it was agreed that now a commonwealth process has commenced to deal with the outstanding matters relating to the Alpha Coal project, this will continue to its completion."

Moreover, Queensland has been directed to show proof next week why it should not be suspended from a bilateral agreement that streamlines major environmental approvals, the AAP news agency reported.

In May 29, the state government gave its conditional stamp of approval to the development of the Alpha Coal Project in Queensland State. The project is expected to generate around 30 million metric tonnes of thermal coal annually over its 30-year mine life.

After Queensland's approval, as part of the regulatory process, the federal government has 30 days to approve the state government's ruling.

But the Federal Environment Minister said he will not sign off the state government's approval owing to deficiencies.

The Queensland government defended its ground, saying a robust environmental assessment was conducted prior to the green light it gave the project.

The ongoing crisis between the state and federal government has been also considered as appropriate motive to discuss the existing bilateral agreement, according to Mr Burke.

"There would be discussions in coming days to determine how the current bilateral agreement might be amended to create greater certainty for the environment and business," he said.

"For whatever reasons the current bilateral has not delivered the twin aims of high environmental standards and a streamlined process for business. The work in coming days aims to resolve this," he said.

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Great Barrier Reef Concerns: Australia Back Tracks on $6.4B Coal Mine Project of Rinehart, India GVK Power