The NSW government is being urged to ensure Australian steel is used in all of the state's construction projects amid the Arrium crisis.

The troubled miner and steelmaker went into voluntary administration on Thursday, putting up to 7000 jobs at risk – including 2800 in NSW.

“The potential collapse of steelmaking in Whyalla shows why NSW parliament can’t delay and must immediately legislate for local steel procurement,” Greens MP David Shoebridge said.

Mr Shoebridge said a recent Greens bill that placed a mandate on government infrastructure projects to use locally manufactured steel would secure the future of BlueScope Steel’s Port Kembla steelworks in the NSW Illawarra region.

“We want to bring the bill on for a vote in May when parliament returns,” he said.

“The NSW parliament has an opportunity to lead the way, and an obligation to adopt this as a template for procurement bills around the country to protect our steel industry.”

Mr Shoebridge criticised the government for using “steel imported from Spain” for major infrastructure projects such as the CBD and South East light rail developments.

“The cost of saving a few dollars by buying steel dumped on the Australian market by international companies is being paid by workers, their families and the communities who will all suffer if the domestic industry is allowed to fail,” he said.

BlueScope Steel’s 4500 workers and thousands of others in the Illawarra won a reprieve last year after the state government gave the troubled steelmaker $60 million in payroll tax relief.

Port Kembla workers also agreed to 500 job cuts, wage freezes, and workplace restructuring to help save the plant.