The decision to extend a big WA mining camp has caused a stoush between the state’s Liberals and Nationals.

In the state where the two parties are furthest apart from a coalition, the latest disagreement has widened the gap.

WA Premier Colin Barnet has signed papers to extend the lease for BHP Billiton’s 1,600-room workers camp near the town of Newman.

But WA Nationals Leader and Lands Minister Terry Redman has refused to add his signature to the deal.

Mr Redman says extending the lease for the big camp on the edge of a small town goes against the Government’s supposed policy to develop regional communities.

Mr Redman’s stance has been backed by former Nationals leader and current Member for Pilbara Brendon Grylls.

“We are at an impasse, and it’s a big impasse,” Mr Grylls said in Mr Redman’s absence this week.

“I welcome the debate. The Liberals and the Nationals are two separate political parties. We clearly have a very different view on the way forward in the Pilbara and this issue is far from resolved,” Mr Grylls said.

Mr Barnett has acknowledged the Nationals' concerns, but says BHP has its rights.

“I would like to see more workers living locally in townships around the mines, rather than fly-in, fly-out. However, it is a matter of choice,” he said.

He said the 1960 State Agreement gave BHP the ongoing right to run its work camp near the town.

“They are entitled to a lease extension under the state agreement and indeed the state has a statutory obligation to sign that lease extension, so it will be signed,” Mr Barnett said.

The Premier told Parliament that BHP actually planned to reduce the size of the camp to 1,200 beds, while undertaking $130 million worth of upgrades.

Mr Grylls says it goes against a vision for the Pilbara cities unveiled by the Premier and himself in 2009, which would have seen them grow substantially.

“The Premier and I flew to the Pilbara. We announced our Pilbara Cities Vision. Our plan was to grow the population of Newman to 15,000 people,” he said.

“It's hard to get to a population of 15,000 if you keep renewing camp leases when they come up for renewal,” he said.

The head of a parliamentary committee investigating the mental health effects of fly-in, fly-out (FIFO) work has expressed dismay at Barnett's decision too.

Liberal MP Dr Graham Jacobs was charged by Parliament with investigating FIFO health implications, and says he is appalled at this week’s decision.

“I'm disappointed,” Dr Jacobs said.

“What we needed was some community integration.”

“One of the major issues [highlighted in the FIFO review] was not only the family disconnect but community disconnect,” Dr Jacobs said.

“We found that was a major contributor and an aspect of vulnerability in FIFO.

“There are four very clear recommendations... which the Government agreed to; engaging mining companies, engaging with community.

“Unless we're going through an exercise in futility and wasting our time, I think it's important that the Government listens to the recommendations, particularly ones they've agreed to.”

Dr Jacobs said falling back on the 1960 State Agreement was not enough.

“That's 55 years ago. We've moved on as a community and as a society,” he said.

“We have a responsibility in 2015, 55 years later, if there is an opportunity to review that, and adjust that, I think that's a missed opportunity.”