Tamworth MP Kevin Anderson and Gunnedah-based MLC Sarah Mitchell will abstain from voting on government bills until amendments are made to a state policy relating to koala habitat protection.
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They however say they reserve the right to support bills and motions that are important to regional NSW, effectively putting the entire party on the crossbench.
The two MPs stood with NSW deputy premier John Barilaro when he made the announcement on behalf of the NSW Nationals on Thursday morning.
Mr Barilaro said the party "needed to flex some muscle" to ensure farmers were not hindered by the State Environmental Planning Policy (SEPP) Koala Habitat Protection policy.
They also want a thriving koala population in NSW, but say the SEPP achieves none of this.
The Nationals will introduce a bill to the Legislative Assembly to repeal the SEPP on Tuesday.
Mr Barilaro denied the party was splitting from the Coalition and said the Liberals needed to "come to the table" and consider the amendments the Nationals were putting forward about the SEPP.
"This is about the rights of our farmers and our regional communities," he said.
"We will be abstaining from voting on government bills but reserve the right to vote on bills and motions that are important to regional and rural Australia.
"It's effectively putting all members on the crossbench in a roundabout way. All members are united on the cross-bench in a way of not supporting government bills. But we are not going to surrender our portfolios ... we're going to sit back and fight."
Mr Barilaro said the party was backing "sensible, scientifically-backed amendments to the SEPP that actually protect koalas and allow us to build koala habitat across the state".
Among the proposed changes are a clear definition of core koala habitat; increasing the number of core koala trees species from 10 to 39; decoupling of Private Native Forestry from the Koala SEPP; that rural regulated land and agricultural production come under the land management framework operating outside of the SEPP; and local councils be required to carry out on-ground surveys in areas of proposed core koala habitat on private land.
