The Energy and Resources Minister, Chris Hartcher, introduced a resolution to Parliament requiring the Independent Commission Against Corruption to investigate the circumstances surrounding the granting of the licence. He told Parliament the report showed there was ''a clear departure from proper practice''.

''There have been serious errors of judgment on the part of Ian Macdonald, with a cloud hanging over the dealings between him and his union mate,'' Mr Hartcher said.

In July, the Department of Resources and Energy commissioned Clayton Utz to review the circumstances surrounding the awarding of the licence by Mr Macdonald, who was minister for mineral resources in the former Labor government.

Mr Macdonald, who resigned from Parliament last year over an expenses scandal, awarded the licence to Doyles Creek Mining, a company chaired by John Maitland, a former national secretary of the Construction, Forestry, Mining and Energy Union who also had an 11 per cent shareholding. Doyles Creek Mining was taken over by NuCoal resources last year and floated on the stock exchange for $100 million, eventually inflating Mr Maitland's shareholding from $165,000 to about $10 million.

The report, revealed by the Herald yesterday, found that there were other companies interested in an exploration licence at Doyles Creek, in the upper Hunter. But Mr Macdonald invited Doyles Creek Mining to apply for the licence, failing to put it to tender as required under departmental guidelines.

Mr Macdonald's decision ''may well be voidable on the basis of it being in excess of jurisdiction, bad faith or manifestly unreasonable'', the report finds. It recommends the government establish a special commission of inquiry into the granting of the licence.