The West Australian government will fork out a further $220 million to prop up a failed coalmine that is critical for electricity generation.
Premier Roger Cook says the grants will enable Griffin Coal, which called in receivers last year, to continue operations at its Collie mine until June 2026 and save the jobs of hundreds of workers.
But he warned support for the debt-laden mine wouldn't be extended past that date.
"It is disappointing that the private companies involved in Griffin have been unable to find a commercial solution to their problems, despite significant support from government," he said on Friday.
"But a sudden closure of the Griffin mine would see hundreds of workers lose their jobs overnight and put at risk the stability of our electricity system."
Griffin supplies coal to industry and the Japanese-owned Bluewaters Power Station, which produces more than 15 per cent of WA's electricity.
Receivers were appointed to Griffin, which is owned by India's Lanco Infratech, last year following commercial disputes.
Mr Cook said the mine had significant debt, ageing infrastructure and was trapped in a contract with Bluewaters Power Station to provide coal at a price below the cost of production.
"So it's incumbent upon the government to now intervene to take control and to ensure that we find a way to keep the lights on by keeping this coal mine working," he said.
"We can't let it fail."
The WA government has injected $39.3 million to prop up the mine, 185km south of Perth, during the past 12 months.
Mr Cook said providing funding to Griffin until mid-2026 would give the mine workers and industry time to prepare for the mine's potential closure.
"This is the only way that we can actually resolve it for now, a brutal, time-limited solution," he said.
Shadow treasurer Steve Thomas said the McGowan and Cook governments had failed to adequately reform and manage the Collie coalfields.
"When the free taxpayer cash runs out in mid-2026 we will be in exactly the same dilemma, having simply kicked the can down the road without a single real solution being provided," he said.
Unions warned the decision to only fund the mine for two-and-a-half years would have dire consequences for jobs, energy security and the long-term future of the region.
Mining and Energy Union WA secretary Greg Busson said the plan "rubber stamps" the eventual closure of Griffin Coal and Bluewaters Power Station.
Australian Manufacturing Workers Union secretary Steve McCartney said the support was not enough to allow the workers and the Collie community to transition away from the coal industry.
"After multiple reviews by expensive consultants, the best plan the government can come up with is to tip more taxpayer money down the black hole at Griffin Coal," he said.
Australian Associated Press