The Narrabri underground mine, operated by Whitehaven for the past decade, produces 11 million tonnes of coal annually.
Originally slated to mine coal until 2031, the Independent Planning Commission on Friday granted it an extension to 2044 to extract a further 82 million tonnes.
The IPC panel said the project fulfils an "appropriate balance between relevant environmental, economic and social considerations".
Whitehaven says the extension will provide the state with nearly $600 million in economic benefits and keep 500 local jobs alive for decades.
The firm said it would "reduce CO2 (carbon dioxide) emissions at the mine over time".
But the approval has been slammed by those calling for action on climate change.
"The decision to approve Whitehaven Coal's Narrabri mine extension... is reckless and dangerous given the climate disasters Australia is experiencing right now," said Rod Campbell, Research Director at The Australia Institute.
"The NSW government cannot hide from the fact these emissions will be its responsibility."
Boggabri farmer Sally Hunter referred to a Thursday ruling by the NSW Land and Environment court fining Whitehaven $158,000 for polluting a creek in the Narrabri region.
"It beggars belief this company can commit serious crimes and instead of being appropriately punished, it is given more land to destroy, more water to drain, more lives to upend," said Ms Hunter, who is based in the Narrabri Shire.
Independent NSW MP Justin Field described Friday's decision as "unfathomable" against the backdrop of flooding in the Northern Rivers region, which has claimed 10 lives so far.
"This is a catastrophic decision for NSW and the planet," he said.
"The fact new coal mining can be approved out to 2044 under existing policy makes a mockery of the (state) government's 50 per cent by 2030 ... climate targets.
"Any economic benefit is clearly dwarfed by the billions it is already costing the taxpayer and individuals to respond and rebuild following the cascade of climate crises being experienced by communities across the state."
Greens MP Cate Faehrmann labelled the approval as "nothing short of criminal", saying it would further "contribute to the misery and trauma that communities are facing as a result of more and more catastrophic weather events".
Last month, hundreds of school students staged a climate change rally outside the prime minister's official Kirribilli residence, and lone protesters have been blocking traffic in Sydney in recent weeks.
In March, the NSW Federal Court also unanimously ruled the Commonwealth government did not have a duty of care to children caused by climate change.
Eight high school students sued federal Environment Minister Sussan Ley in 2020, seeking to block the expansion of a northwest NSW coal mine expected to produce an additional 100 million tonnes of carbon emissions.
Ms Ley won her appeal in March, which the students described as "devastating".
The Vickery mine is also owned by Whitehaven.
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