A victory for community rights in New South Wales, as a gas drilling operation is shut down.

Resources Minister Anthony Roberts has suspended the right to drill for petroleum company Metgasco Limited, after it failed to meet its licence conditions.

Metgasco had been looking for new supplies on the state's north coast, but Mr Roberts says it did not undertake genuine and effective consultation with local communities.

But problems for the miner may go deeper, as Mr Robert also referred allegations over Metgasco's shareholdings and interests to the Independent Commission Against Corruption (ICAC).

Hundreds of protesters had camped for weeks at a site near the town of Bentley, ardently opposing Metgasco’s efforts to start coal seam gas drilling operations there.

As with many regional communities, the residents said that not enough is known about the potential risks of CSG drilling, and their vital natural resources were too valuable to risk.

The numbers in the camp swelled to over 2,000 when rumours arose that trucks were on their way.

Several local landowners and delegates were in Sydney ready to bring the issue directly to the Minister when the cancellation announcement was made.

The size of the opposition worried NSW Parliament this week, with warnings that hundreds of police would soon be needed to control the sensitive situation.

All mining operations are one-time deal, and the locals say now is not the time to pull out their future supplies.

The Nationals' MP and former Minister for the North Coast Don Page said the industry is not welcome, or needed.

“It’s quite obvious that we don’t want CSG drilling on the north coast,” he told the ABC.

“So look, I think let’s wait and see how it plays out... I think for the moment anyway we've got a sensible outcome and the risk of people being injured and the police being involved in what would have been a very ugly situation moving forward has been averted.”

Lismore's Mayor Jenny Dowell told the ABC she is overjoyed by the decision, but knows the war may not be over.

‘It is a suspension, I'm not fully celebrating at this stage,” she said.

“I know there will be a good process and I really congratulate the minister for the process, but I think this is only one thing.”

“We've got other mining companies in this area with licences, there's the potential for thousands of wells, this is only the first.”