The federal government will report to the World Heritage Committee before any final decision is made on a controversial plan to raise Warragamba Dam wall.
Pressure is mounting on both the NSW and federal government over plans to raise the Warragamba Dam wall which would flood parts of the heritage-listed Blue Mountains.
The World Heritage Committee - which has the final say on sites on UNESCO's world heritage list - has insisted it review the project's environmental impact statement before the commonwealth makes any final decisions.
The WHC, at its annual meeting on Wednesday, noted the plan to raise the wall by 14 metres is expected to increase the frequency and extent of temporary "inundation" in the world heritage-listed Blue Mountains.
The committee also warned the federal government that dam proposals within the boundaries of world heritage properties are incompatible with their heritage status.
Federal Environment Minister Sussan Ley on Thursday said the government recognised the importance of protecting the area and will submit the EIS to the committee for review.
A UNESCO advisory body said the onus is now on Ms Ley and insisted the NSW government also hold back on any permanent decisions such as construction contracts until the WHC responds to the EIS.
"The WHC has now, quite properly, expressed grave concern about the Warragamba Dam proposal," Australia's International Council on Monuments and Sites president Ian Travers told AAP in a statement.
Mr Travers said the wall raising will affect a globally-significant ecosystem and some rare species which put the area on the world heritage list.
Joan Domicelj prepared the official nomination that saw the Greater Blue Mountains Area added to the world heritage list in 2000.
She says the WHC response to the plan is "strong and encouraging".
"My own fear is if the wall raising got approved, the overdevelopment of floodable plains would continue," she told AAP.
"That's really unacceptable when it comes at expense of world heritage."
Former NSW environment minister Bob Debus spoke at the WHC annual meeting in Azerbaijan and said failure by the government to protect the heritage area would be a "fundamental attack" on the World Heritage Convention.
NSW opposition environment spokeswoman Kate Washington accused the Berejiklian government of ignoring expert advice and urged the plan be scrapped.
The NSW Greens said the federal government should "urgently intervene" to protect the Blue Mountains.
"With the world watching, the NSW government is on notice that it cannot get away with sacrificing one of the most pristine natural environments left on earth to satisfy the insatiable developer lobby," environment spokesperson Cate Faehrmann said in a statement.
Western Sydney Minister Stuart Ayres insists raising the wall will help reduce the flood risk in the Hawkesbury-Nepean Valley.
He noted that while there will be environmental impacts as a result of the raised dam wall, the impacts must be measured against those of a "catastrophic" flood.
The project came under scrutiny earlier this year after AAP revealed the NSW government was actually planning to raise the dam abutments at each end of the wall by 17 metres, to allow for future modifications to hold back additional water.
ICOMOS has previously warned the proposal could flood up to 1000 hectares of world heritage area and 3700 hectares of surrounding national park.
The EIS will be submitted to the WHC when it's released for public comment in early 2020. It will then be subject to federal government approval.