Announced last month, the proposed project has been deemed as Critical State Significant Infrastructure (CSSI), due to its potential for new jobs and its potential to create 750MW of electricity on demand.

"With another player in the energy market, it increases competition and will help mitigate the closure of Liddell's coal-fired power station in 2023, putting downward pressure on electricity prices," Mr Stokes said.

"Gas-fired power stations will have a critical role to play in ensuring our energy security as we transition to a low-carbon emissions economy with renewable energy projects such as wind and solar."

However, Lock the Gate NSW co-ordinator Georgina Woods said converting the site, which was closed and demolished in 2012, was unnecessary because "no one is asking for this gas-fired power plant".

"It's disappointing to see Rob Stokes falling into line with the Federal Liberal Party's baffling waste of taxpayer money on gas infrastructure and handouts to gas companies," Ms Woods said.

"Gas usage has been declining in eastern Australia because it is too expensive and fuels climate change.

"This bizarre announcement is clumsy and costly, and poses a risk to farmers and rural communities if the gas used to supply the plant comes from beneath farms in the North West via yet-to-be-built destructive gas-pipelines.

"This is a clumsy political intervention when what the country needs is a steady hand and sensible policy to protect farmland and water, and quickly reduce greenhouse pollution in an orderly and responsible way."

Mr Stokes responded to the claims saying the project was far from approved. "Firstly, the project hasn't been approved, it has been declared CSSI and still needs to go through a rigorous and comprehensive assessment process the same as any other project," he said.

"It was declared CSSI as it could potentially generate up to 750MW of energy, create up to 600 jobs during construction and bring in approximately $800 million worth of investment to the regional economy. As well, it could address the shortfall in dispatchable energy identified by AEMO once the Liddell power station closes in 2023."

The proponent behind the project, Snowy Hydro, lodged the application to make the project CSSI and will now begin putting together the project's environmental impact statement, which is expected to be submitted in mid-2021.