Environment Victoria is concerned that the Environment Protection Authority (EPA) is likely to extend the permit for the Yallourn power station to pump flood water into the Latrobe River.
The power station mine was flooded when the Morwell River diversion collapsed during floods earlier this year.
The EPA has released a report saying water pumped from the flooded mine into the Latrobe River is not seriously affecting the river's quality.
The mine owner, TRUenergy, has now applied for an extension to its permit to pump water into the river.
Mark Wakeham from Environment Victoria says there could be problems for months and perhaps years to come.
"They're unstable and they're near very large pieces of infrastructure, so … there's a real risk of land slippages and impacts on the environment and that's what happens when you dig very big holes and pump water from those areas for decades," he said.
"This should really be a warning sign that these mines have significant impacts.
"We're going to have ongoing water management problems for months to come if not years and it should really be a warning that we shouldn't be digging ourselves deeper into this problem."
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