Liberal MLC Peter Phelps has resigned as NSW upper house whip in opposition to the government's controversial ethanol mandate legislation.
Mr Phelps resigned in order to cross the floor to vote against the laws, describing the bill as a fundamental attack on small business.
The Biofuels Amendment Bill 2016 will force small petrol retailers to sell an ethanol blend, potentially driving up the price of petrol by up to 8c a litre.
"This bill ... which criminalises people for the purchasing decisions of their customers, is such an egregious breach of the core values of the Liberal Party that I cannot support it," Mr Phelps said during a fiery speech to parliament.
He said there were many times he had to "whore out his principles" for his job as government whip but he would be resigning effective immediately on Tuesday so he could cross the floor to oppose the legislation.
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The bill is expected to require smaller retailers that sell three or more types of automotive fuel to sell E10 for the first time to reach a six per cent mandate.
NSW has never reached the mandate and currently only two per cent of fuel sales in the state are ethanol.
Innovation and Better Regulation Minister Victor Dominello has said the legislation is not meant to hurt small business owners, and retailers owning fewer than 20 sites will be exempt.
Two other Liberal MPs, Matthew Mason Cox and Scott Farlow, also voiced their opposition to the bill in parliament on Tuesday but said they would support it.
Labor has indicated it will pass the legislation but the Greens have opposed it, with Greens MP Jeremy Buckingham describing it as "entirely rotten".
