Govt can't tear up Newcastle rail

The NSW government has been forced to seek parliamentary permission to tear up railway lines running through Newcastle.

The Supreme Court on Wednesday found the government and its agencies didn't have the power to sell or close the rail corridor without parliamentary approval, Greens MP David Shoebridge said.

"The government was attempting to use a legal charade involving the Hunter Development Corporation to avoid the clear statutory prohibition," he said.

Fairfax reports that the government tried to circumvent laws prohibiting sale by transferring ownership from RailCorp to another agency.

The first round may have been won but Mr Shoebridge believes the fight, led by community group Save our Rail, is not over.

"I have little doubt the government will seek to appeal," he said.

The Greens are "unwavering supporters" of retaining the Newcastle rail line, Mr Shoebridge added.