CANBERRA, AAP – The federal government has taken the final step to knock back a controversial oil and gas drilling permit off the NSW coast.

The Petroleum Exploration Permit 11 (PEP11) between Newcastle and Wollongong had been the subject of vocal community opposition.

Prime Minister Scott Morrison on Friday said he had taken the final step to reject the application.

That step involved a decision under section 59(3) of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to refuse the application.

“PEP11 is officially dead in the water,” Mr Morrison said in a statement.

“I said the project would not proceed on our watch, and that is exactly what has happened.”

The NSW government has agreed with the decision and the National Offshore Petroleum Titles Administrator has advised the applicant of the decision.

Advent Energy and Bounty Oil and Gas had sought a renewal of the exploration licence and permission to undertake exploratory drilling in the area primarily within Commonwealth waters.

Environmental and community groups had strongly campaigned against the project and planned to make it an issue in the federal election campaign.