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'We won't let up our War Of Words over Water' vow graziers.

Drought-stricken farmers fighting to stop a controversial coal project they say threatens their water supply, are refusing to back down, despite the failure of a major legal challenge.

More than 12 years after New Acland Coal first sought approval for a $900-million expansion on the Darling Downs near Oakey, its way ahead appears clear following a decision by the Brisbane Court of Appeal.

The project will save 150 coal-workers' jobs, boost the mine's annual production to 7.5 million tonnes, and create millions of dollars for the state's coffers.

But Oakey Coal Action Alliance graziers say they'll continue to battle the mine's plans, which they fear could deplete or contaminate underground water supplies in their region.

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