Cargill Beef in Wagga Wagga has to introduce a $13 million wastewater treatment system and cut its killing capacity after its sewer treatment system failed last year.
The pollution improvement works will result in almost a 20 per cent cut in the abattoir's daily kill.
Cargill had approval to kill 2,000 head of cattle a day but that has been reduced to a maximum of 1,600 head by Planning New South Wales.
The department has granted Cargill approval to do works to reduce odours and improve wastewater quality by building a new wastewater treatment system.
There are 104 conditions of approval for the $13 million upgrade.
Cargill says the Planning Department directive does not affect jobs because it is killing only 1,250 head of cattle a day.
The deputy director general of the Planning Department, Richard Pearson, says there has been a history of odour complaints about the Bomen meat processor.
"There have over the years been ongoing issues raised in relation to the odour impacts of the abattoir and in relation to water quality," he said.
"It came to a bit of a head in 2009 last year when there was a failure at their sewer treatment system."
Mr Pearson says the new system is a win for Cargill's neighbours.
"It is important that businesses such as this manage their impacts effectively," he said.
"Odour is a particular issue for people who surround these kinds of developments so I think this will be a good outcome for those people as well."
