This week's decision by the parliament's Upper House is a victory for animal rights campaigners.

One of the core issues to be examined by the inquiry is the commercial culling of kangaroos.

Animal Justice Party MP Mark Pearson, who is deputy chair of the new inquiry, wants the culling to end, and also wants the commercial kangaroo industry shut down.

The parliamentary inquiry comes as Australia is already fighting to keep the kangaroo trade afloat in the United States.

A diplomatic campaign has been launched in the past few weeks to counter a growing animals rights push against kangaroo leather and meat imports.

Diplomats have been charged with rebuffing "a myth that persists that commercial kangaroo harvesting is a threat to the species".

There are an estimated 40 million kangaroos in Australia, culling quotas are set by governments at about 10 to 20 per cent of total populations. Most cull targets are never reached.

Two Congressmen initially introduced a Bill to stop the trade, with sponsors of the Bill now growing to include six Democrats and two Republicans.

Agriculture Minister David Littleproud said the government had now invited those Congressmen to visit Australia, when they are allowed, "to understand how the industry works".

The US is the second biggest buyer of kangaroo products behind Europe, and the US trade alone is worth about $80 million annually.

The NSW inquiry will examine the health and welfare of "macropods" which are kangaroos, wallabies and wallaroos.

The decision received unanimous support from members of the Legislative Council's Planning and Environment committee.

Mr Pearson welcomed the decision as an "overdue, historic win".

"Finally, we can take a magnifying glass to the cruelty inherent to the commercial kangaroo industry and reveal just how bad things are: adult kangaroos shot and beheaded in the middle of the night, strung up on utes as their joeys are bludgeoned to death beside them.

"It's the world's largest commercial slaughter of land-based wildlife, yet it's still such a secretive and largely unregulated industry," he said.

Most states set their annual culling quotas at 10-20 per cent of the total estimated kangaroo population.

Quotas in New South Wales for its commercial harvest are divided into kangaroo management zones.

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Last year's quota was set at 2,126,176 with an estimated kangaroo population across the state of more than 14 million.

Terms of reference for the NSW inquiry include an investigation into:

"Kangaroos have never been in more danger than they are right now, so while overdue, this inquiry has never been more appropriate," Mr Pearson said.

Online submissions can be made to the inquiry here. Submissions will close on April 26.

Chair of the committee is Greens MP Cate Faehrmann.

"I've been hearing horror stories of the impact on kangaroo and other macropod numbers of drought, bushfire and big agribusiness, so this inquiry is an important one," Ms Faehrmann said.

The inquiry is to report to parliament in September.