The spending, yet to be announced, will compensate commercial fishers for the establishment of marine protection zones in the region, some of which will not allow any fishing.

But the proposed spending falls short of the amount that green groups say is needed to ensure the system of marine parks is properly protected and industry well compensated.

The marine campaigner for the Australian Conservation Foundation, Chris Smyth, said the plans represented a ''remarkable opportunity to establish a world-class network of marine sanctuaries in Australia's unique south-west''.

He said: ''To avoid missing that opportunity the government needs to back its south-west regional marine plan with about $50 million of funding.

''That will maximise the protection of ocean life while doing the right thing by commercial fishers that may be affected.''

The federal government has committed itself to setting up by the end of next year marine parks along all parts of Australia's coast that are not already protected, to preserve marine environment and restore dwindling fish stocks.

Environmental protection for marine life can range from ''no take zones'' - which allow no fishing or resource drilling - to only limited protection, permitting a full range of industrial activity.

Government sources have told the Herald that the level of protection for the south-western oceans will be significant when it is announced this month.

This is because the government believes conflict with commercial fishing will be muted and the environmental values of the region are high.

The government is also eyeing off a high level of environmental protection for the Coral Sea, which sits between the Great Barrier Reef and the edge of Australia's territorial water and is the site of a number of historic shipwrecks from World War II.

The Herald also understands that commercial fishers working in the Coral Sea have approached the government and are prepared to stop fishing in the region in exchange for compensation.

The exit of the fishing industry would pave the way for an extensive system of marine parks, though a final deal is not expected until next year.

But marine parks off north, north-west and eastern Australia will be limited.

Along the NSW coast, Labor is expecting an angry reaction from fishing groups in a number of key marginal seats.

The parliamentary secretary for Fisheries, Mike Kelly, whose seat of Eden-Monaro takes in south coast fishing communities, is understood to have been a vocal opponent in the Labor caucus of significant protection for the marine environment in the region.

In the north-west seas the government is reluctant to intervene in the significant expansion of the oil and gas industries.

Marine reserves were set up under the Howard government along the Victorian and Tasmanian coasts.

Only 8 per cent of the parks set up were deemed off limits for industry.