The Independent Planning Commission (IPC) will only be brought in to determine the state's "most controversial projects" that have received at least 50 "unique" community objections, under an a sweeping overhaul of its role.
The commission had been criticised by objectors and proponents alike for its handling of a number of contentions mining projects in the Hunter in recent times.
These include the Rix's Creek open cut proposal near Singleton and Kepco's proposal for a coalmine in the Bylong Valley.
A review of its performance by the Productivity Commissioner found that, while it was in the public interest to retain the IPC, its policies and programs had not always provided certainty, consistency and timeliness.
Planning Minister Rob Stokes said that he accepted the review's 12 recommendations.
He said the IPC would undergo a "significant transformation with new performance benchmarks, streamlined processes, and greater accountability". The review also recommended appointing new commissioners and fewer than the 29 currently serving.
"An effective planning system was vital to the health of the NSW economy and the recommendations would increase certainty and confidence," Mr Stokes said.
The NSW Minerals Council said it cautiously welcomed the outcome of the review.
"The review report makes clear that the role of the IPC should not be to set government policy or conduct its own assessment process, as it has previously sought to do," the council's statement said.
If properly implemented, the recommended changes have the potential to improve the planning process and deliver shorter project assessment timeframes.
Sign up for our newsletter to stay up to date.