In a 149-page decision, Land Court member Paul Smith recommended to the minister that the Alpha coal mining lease application, submitted by Gina Rinehart's Hancock Coal, either be rejected outright or granted if a range of conditions were met.

Those conditions included electronic water level monitoring on the properties of three of the mine's objectors and that Hancock enter into make-good agreements with the Currie, Anderson and Cassoni families whose properties would be affected by the mine.

The Alpha project is 79 per cent owned by GVK and 21 per cent owned by Rinehart's Hancock Coal. The central Queensland project is scheduled to be up and running in 2016, and is expected to export 32 million tonnes of coal a year.

Outside court, GVK Hancock corporate affairs manager Josh Euler said the company would “work through” the conditions set by Mr Smith.

“We'll be continuing to work with the environmental authorities going forward to sort through what those recommendations mean,” he said.

“We are well aware of the fact our project represents one of the most significant pieces of regional and economic development we've seen for many decades.”

But one of the objectors, the Coast and Country Association, saw the decision in a positive light for anti-mine campaigners.

Coast and Country spokesman Derec Davies said it was a “great decision” for opponents of the mine.

“The judge has clearly stated that the evidence provided to the court in relation to water is unsatisfactory and not in the public interest for this mine to be approved.

“This is an excellent day for Queensland and this is an excellent day for Queensland's farmers.”

Mr Davies rejected suggestions the conditions would be “easily met” by Hancock Coal.

“This is a huge barrier for the company to overcome,” he said.

“The judge has clearly stated his concerns for water impacts off the site of the mine – this is a hurdle that's going to be very high for the company to meet.”

Mr Davies said he was hopeful the pro-development Newman government would send the company back to “do its homework”.

“We expect the ministers to not only represent the mining companies that are seeking to mine Queensland resources, but ministers to protect the citizens of Queensland and, more importantly, to protect the farmers and their businesses,” he said.

Queensland Resources Council chief executive Michael Roche chalked the decision up as a win for the resources sector.

“The Alpha project is a long-term commitment to Queensland that will generate an estimated 7500 jobs during construction, almost 4000 operational positions and around $40 billion in royalties and taxes during its lifetime,” he said.

“This kind of economic development is a game changer for the central west in addressing a long-term decline in the region's fortunes.”

Mr Roche said objections had come from the “usual suspects” of anti-coal activists and criticised the court action against the project.

“Genuine community concerns should and can be given voice at the Environmental Impact Statement stage of a project's regulatory process, rather than resorting to expensive and long-winded Land Court objections at the end of the process,” he said.

The Lock the Gate Alliance called on the state government to "totally reject" the Alpha mine project.

Spokeswoman Ellie Smith said the court had "vindicated" their concerns about the impact of the mine on the region's water supply.

"The court put forward an option for the Qld Government to reject the coal mine outright and we are calling on them to act on that recommendation to protect water resources and provide certainty for local farmers," she said.

"This decision will also have repercussions for other coal mines in the region and we now want to see a study done of the cumulative groundwater impacts of all proposed coal mines in the region as a matter of urgency."

Acting Premier Jeff Seeney said the Queensland Government welcomed that this matter had been finalised.

“We will closely examine the Land Court decision, in the light of the conditions already placed on the project by both the Queensland Coordinator General and the Commonwealth Government," he said.

“We look forward to working with the project proponents to deliver jobs and economic benefits to Queenslanders.”