The Greens will direct their preferences to Labor in 23 key knife edge seats at Saturday's election, including the Blue Mountains.
The Labor candidate for the Blue Mountains Trish Doyle, who is also a Blue Mountains Conservation Society member, said locally they had decided a few weeks ago to trade preferences with the Greens candidate Alandra Tasire. The Green candidate from 2011, Kerrin O'Grady, secured 16 per cent of the primary vote in the last election but did not trade preferences.
Ms Doyle admitted it would help her chances but also said she felt "cautiously optimistic regardless of any preference arrangement".
"The Blue Mountains Labor team talked about who of the candidates most closely linked in with our values and issues that we cared about - mainly TAFE, the environment, the privatisation agenda and the sell-off of our poles and wires and obviously Alandra fits the bill there."
"She [Alandra] rang to say they had had a vote and the local Blue Mountains Greens decided for the same reason to put me at number two."
Ms Tasire said: "As it is about a choice between Labor and the Coalition, I know that Labor is the only party that is better on the issues like TAFE, community services, privatisation and the environment."
"I feel I could work with Trish in the future to negotiate change in parliament based on core Greens values on behalf on the Greens voters in the Blue Mountains."
Member for Blue Mountains Roza Sage said she was not surprised by the decision.
"That Labor and the Greens have entered into this alliance is unsurprising given their shared preference for misleading scare campaigns over meaningful plans for the future. The people of the Blue Mountains should understand that a vote for Labor is a vote for the Greens."
Ms Doyle said she was a "believer in numbering every square, making sure people use the optional preferential system so that's why we have done" adding that "the Libs and the Fred Nile party probably have a preference arrangement it's just not printed on their how-to-vote cards".