Energy giant AGL has ended all political donations in a bid to ease community concerns that "big business" was using such funds to secure "undue influence".

The company revealed its new policy to "prohibit" donations in a post to its website on Wednesday. It said its own review found half of the largest 50 ASX-listed companies did not disclose any donations to the Australian Electoral Commission during the 2014 financial year, and about a quarter of the company banned political donations altogether.

"While political donations from companies like AGL are not prohibited under legislation, we acknowledge the community perception that political donations may constitute undue influence from business on government," the company said.

AGL called in external auditors last year to review "errors and omissions" in its political donation disclosures in NSW since 2008. During the period, the company applied to drill 110 coal seam gas wells near Gloucester on the state's mid-north coast.

The project has been mired in controversy, particularly over the treatment of waste water, and remains limited to just four test wells.

Mostly to LNP in NSW

Donations have flowed almost exclusively to the Liberal and National parties' divisions in NSW since a $13,750 payment to the ALP's NSW branch in June 2010, the company said.

In the company's 2014 financial year, for instance, AGL granted $5500 to the Nationals for the state election campaign, and $5250 to the Liberals' state campaign. The Liberal Party's federal campaign in NSW received a further $17,000 in donations.

During the year, the company donated to the ALP in South Australia and Victoria, but not NSW.

AGL's donations trailed off in the 2015 financial year, with $550 going to the ALP NSW's state campaign but none to the Liberals and Nationals in the state.

Groundswell Gloucester, an anti-CSG group that has kept a close eye on AGL's donations, claimed credit for prompting the cessation of donations.

"This decision is to be applauded but I have no doubt that it's been precipitated by the fact that AGL's past political donation practices have been exposed by community groups such as Groundswell Gloucester," John Watts, a group spokesman, said.

"It is time that the government took immediate steps to now place a ban on political donations by all mining and resource companies and restore some integrity to the system."

Jamie Parker, the Greens anti-corruption spokesman, said AGL's move was significant.

"Corporate donations have a corrosive influence on democracy and undermine confidence in the political system," Mr Parker said. "It is particularly the case in the mining and resource sector where decisions of government determine the success or failure of major resource projects.

"AGL's announcement puts additional pressure on the government to reform political donations to ensure that decisions are made on merit not money."

Fairfax Media sought comment from Premier Mike Baird's office and the ALP.