In this work, the effect of stresses and the reservoir boundary conditions on the permeability anisotropy, mechanical properties and swelling/shrinkage of the coals will be examined.Permeability is the fundamental parameter to understanding and modelling the fluid flow in the porous coal, and thus crucial to estimating the commercial gas and water production from coal seam gas (CSG) reservoir. Although permeability is a primary parameter to determine the reservoir production, the fundamental research behind the permeability change during pressure drawdown is not extensively examined in context with reservoir stresses and boundaries which can directly affect the reservoir production estimates. This project provides a mean to understand permeability change in CSG reservoir by conducting experiments and modelling studies to relate coal permeability, mechanical properties and sorption behaviour to different reservoir stresses and boundary conditions.The first objective of this project was to manage the design, construct, and demonstrate a state of the art triaxial stress permeameter (TSP) to measure anisotropic-permeability and stress-strain on coal sample simultaneously. The TSP was designed to measure anisotropic permeability by rotating a 40 mm cubic coal sample in orthogonal direction so that permeability can be measured in directions that align with face cleats, butt cleats, and bedding-plane of the coal. TSP is used in a series of experiments on coal sample UQ-B1 from the Surat Basin to determine in the modulus of elasticity (E) and cleat compressibility (Cf) of the coal sample UQ-B1 (Chapter 4), measure permeability using helium and methane gases (Chapter 5), and the effect of using either constant-stress (free swelling) or constant-volume boundary conditions on the observed relationship between net stresses and permeability changes (Chapter 5).Chapter 4 reports experiments in the TSP to determine the modulus of elasticity (E) and cleat compressibility (Cf) of coal sample UQ-B1 at effective stresses of 0.5 -4.0 MPa. These experiments confirm that these coal properties are anisotropic and stress-dependent. The experimental data also shows that cleats become 'softer' as stress is reduced on the sample which can result in the permeability rise by increasing the cleat width. The calculated modulus of elasticity of the bulk coal was E1 = 4.35 GPa, E2 = 4.90 GPa and E3 = 7.06 GPa perpendicular to face cleat, butt cleat, and bedding-plane directions, respectively. The cleat compressibilities (Cf) calculated from the relationship of pore size to pore compressibility were Cf1=0.1102-0.0333MPa -1 perpendicular to the face cleats and Cf2=0.0588-0.0251MPa -1 perpendicular to butt cleats at effective stresses of σeff = 0.5 -4.0 MPa.