Struggling families and those impacted by natural disasters are being warned to brace for fewer services as steep hikes to insurance premiums bite charities and small businesses.

Reforms to curb workers' compensation claims, aiming to rein in spiralling costs, were voted down in parliament on Friday.

The changes would have made it harder to claim for psychological injuries like post-traumatic stress disorder, anxiety and depression in the scheme, which covers more than 3.6 million workers in NSW.

The state government says psychological claims comprise 12 per cent of workers compensation claims, but 38 per cent of the scheme's total cost.

Asked on Monday if the government would move to revive the legislation he has championed all year as essential and urgent, Treasurer Daniel Mookhey ra

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