THE policy of setting aside land to offset the environmental damage caused by mining and major developments should only be used as a "last resort", a Senate committee has recommended.
A report from the Senate environment committee's investigation of environmental offsets in Commonwealth law was tabled in parliament on Thursday.
Criticised by environmental groups, offsets are used to set aside valuable environmental areas when damage to existing land or marine areas cannot be avoided.
Offsets are meant to be used after major developers have tried to avoid, mitigate or minimise damage to valuable environments, but the inquiry was told it was not always a last resort.
But the recent Gladstone Bund Wall review, among other independent analyses, has questioned the capacity of regulators to ensure offsets are being enforced properly.
Mining and development groups have defended the use of offsets as an integral way to ensure valuable land is set aside when damage to land cannot be avoided.
The committee made 21 recommendations, including that "red flag" areas be created, including World Heritage Areas like the Great Barrier Reef, where offsets cannot be used.
The inquiry report now goes to the government, which will decide what, if any, recommendations to act on.